SOUTHERN CO

For the period ended Dec 31, 2024. Filed Feb 20, 2025.

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FY2024 · Filed Feb 20, 2025

SO$93.65+0.1%Stored close · as of Nov 10, 2026

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Contents

Income Taxes

INCOME TAXES

Southern Company files a consolidated federal income tax return and the Registrants file various state income tax returns, some of which are combined or unitary. Under a joint consolidated income tax allocation agreement, each Southern Company subsidiary's current and deferred tax expense is computed on a stand-alone basis, and each subsidiary is allocated an amount of tax similar to that which would be paid if it filed a separate income tax return except for certain credit utilization and state apportionment results. In accordance with IRS regulations, each company is jointly and severally liable for the federal tax liability.

Current and Deferred Income Taxes

Details of income tax provisions are as follows:

	2024
	Southern Company	Alabama Power	GeorgiaPower	Mississippi Power	Southern Power	Southern Company Gas
(in millions)
Federal —
Current	$221	$357	$200	$32	$(112)	$84
Deferred	387	(111)	211	2	106	86
Total federal	608	246	411	34	(6)	170
State —
Current	152	103	52	(1)	6	42
Deferred	209	11	140	14	(13)	46
Total state	361	114	192	13	(7)	88
Total	$969	$360	$603	$47	$(13)	$258

	2023
	Southern Company	Alabama Power	GeorgiaPower	Mississippi Power	Southern Power	Southern Company Gas
(in millions)
Federal —
Current	$54	$242	$205	$49	$(320)	$62
Deferred	299	(257)	195	(26)	334	68
Total federal	353	(15)	400	23	14	130
State —
Current	41	82	37	1	(1)	24
Deferred	102	14	11	12	(1)	57
Total state	143	96	48	13	(2)	81
Total	$496	$81	$448	$36	$12	$211

II-185

	2022
	Southern Company	Alabama Power	GeorgiaPower	MississippiPower	Southern Power	Southern Company Gas
(in millions)
Federal —
Current	$10	$54	$38	$42	$(43)	$122
Deferred	455	259	152	(16)	56	(3)
Total federal	465	313	190	26	13	119
State —
Current	27	14	(21)	—	2	42
Deferred	303	96	201	11	5	19
Total state	330	110	180	11	7	61
Total	$795	$423	$370	$37	$20	$180

Southern Company's and Southern Power's ITCs and PTCs generated in the current tax year and carried forward from prior tax years that cannot be utilized or transferred in the current tax year are reclassified from current to deferred taxes in federal income tax expense in the tables above. Southern Power's ITCs and PTCs reclassified in this manner were immaterial in 2024 and 2023 and $17 million in 2022. Southern Power received $71 million, $332 million, and $49 million of cash related to federal ITCs under renewable energy initiatives in 2024, 2023, and 2022, respectively. See "Deferred Tax Assets and Liabilities" herein for additional information.

In accordance with regulatory requirements, deferred federal ITCs for the traditional electric operating companies are amortized over the average life of the related property, with such amortization normally applied as a credit to reduce depreciation and amortization in the statements of income. Southern Power's and the natural gas distribution utilities' deferred federal ITCs, as well as certain state ITCs for Nicor Gas, are amortized to income tax expense over the life of the respective asset. ITCs amortized in 2024, 2023, and 2022 were immaterial for the traditional electric operating companies and Southern Company Gas and were as follows for Southern Company and Southern Power:

Southern Company · Southern Power
(in millions)
2024	$109	$58
2023	84	58
2022	83	58

When Southern Power recognizes tax credits, the tax basis of the asset is reduced by 50% of the ITCs received, which, together with the deferred credit, results in a net deferred tax asset. Southern Power has elected to recognize the tax benefit of this basis difference as a reduction to income tax expense in the year in which the plant reaches commercial operation.

State ITCs and other state credits, which are recognized in the period in which the credits are generated, reduced Georgia Power's income tax expense by $44 million in 2024, $49 million in 2023, and $53 million in 2022.

Southern Power's federal and state PTCs, which are recognized in the period in which the credits are generated, reduced Southern Power's income tax expense by $32 million in 2024, $26 million in 2023, and $27 million in 2022.

In 2024, Alabama Power, Georgia Power, and Southern Power entered into transferability agreements with non-affiliated parties to sell ITCs and PTCs at a discount to the generated credit value in 2024, 2025, and 2026. Georgia Power and Southern Power received cash of $11 million and $24 million, respectively, from credits transferred during the year. The discount will be recorded as a reduction in tax credits recognized in the financial statements. The Southern Company system continues to explore the ability to efficiently monetize its tax credits through third-party transferability agreements.

Pursuant to the Vogtle Joint Ownership Agreements, Georgia Power paid $131 million in 2024 and $39 million in 2023 to the other Vogtle Owners for advanced nuclear PTCs for Plant Vogtle Unit 3 and 4, which were utilized and not reflected as a reduction to current income tax expense. The gains recognized in both periods were recorded in income tax benefit and were immaterial.

II-186

Effective Tax Rate

Southern Company's effective tax rate is typically lower than the statutory rate due to employee stock plans' dividend deduction, non-taxable AFUDC equity at the traditional electric operating companies, flowback of excess deferred income taxes at the regulated utilities, and federal income tax benefits from ITCs and PTCs primarily at Southern Power, Georgia Power, and Alabama Power.

A reconciliation of the federal statutory income tax rate to the effective income tax (benefit) rate is as follows:

	2024
	Southern Company	Alabama Power	GeorgiaPower	Mississippi Power	Southern Power	Southern Company Gas
Federal statutory rate	21.0%	21.0%	21.0%	21.0%	21.0%	21.0%
State income tax, net of federal deduction	3.6	5.0	1.7	4.4	(2.3)	7.0
Changes in valuation allowance, net of federal benefit	1.9	—	3.1	—	—	—
Employee stock plans' dividend deduction	(0.4)	—	—	—	—	—
Non-deductible book depreciation	0.6	0.6	0.7	0.3	—	—
Flowback of excess deferred income taxes	(3.9)	(5.3)	(2.2)	(6.5)	—	(2.2)
AFUDC-Equity	(0.8)	(0.7)	(1.0)	—	—	—
Federal PTCs	(2.8)	(0.1)	(3.7)	—	(17.2)	—
ITC amortization	(1.2)	(0.1)	(0.2)	—	(26.4)	—
Noncontrolling interests	0.6	—	—	—	17.1	—
Other	(0.1)	—	(0.2)	—	0.2	—
Effective income tax (benefit) rate	18.5%	20.4%	19.2%	19.2%	(7.6)%	25.8%

	2023
	Southern Company	Alabama Power	GeorgiaPower	Mississippi Power	Southern Power	Southern Company Gas
Federal statutory rate	21.0%	21.0%	21.0%	21.0%	21.0%	21.0%
State income tax, net of federal deduction	2.9	5.2	2.1	4.9	(0.7)	7.8
Changes in valuation allowance, net of federal benefit	(0.3)	—	(0.6)	—	—	—
Employee stock plans' dividend deduction	(0.5)	—	—	—	—	—
Non-deductible book depreciation	0.7	0.7	0.8	0.4	—	—
Flowback of excess deferred income taxes	(9.2)	(19.8)	(2.6)	(10.2)	—	(2.6)
AFUDC-Equity	(1.1)	(1.2)	(1.2)	—	—	—
Federal PTCs	(1.2)	—	(1.4)	—	(7.4)	—
ITC amortization	(1.3)	(0.1)	(0.1)	—	(19.0)	—
Noncontrolling interests	0.6	—	—	—	11.1	—
Other	(0.2)	(0.2)	(0.3)	0.1	0.1	(0.6)
Effective income tax rate	11.4%	5.6%	17.7%	16.2%	5.1%	25.6%

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	2022
	Southern Company	Alabama Power	GeorgiaPower	Mississippi Power	Southern Power	Southern Company Gas
Federal statutory rate	21.0%	21.0%	21.0%	21.0%	21.0%	21.0%
State income tax, net of federal deduction	7.8	4.8	3.3	4.4	1.9	6.4
Changes in valuation allowance, net of federal benefit	(1.6)	—	3.2	—	—	—
Employee stock plans' dividend deduction	(0.5)	—	—	—	—	—
Non-deductible book depreciation	0.6	0.5	0.6	0.3	—	—
Flowback of excess deferred income taxes	(6.6)	(1.9)	(9.6)	(7.8)	—	(2.5)
AFUDC-Equity	(1.1)	(0.8)	(1.5)	—	—	—
Federal PTCs	—	—	—	—	(6.6)	—
ITC amortization	(1.3)	(0.1)	(0.1)	—	(17.2)	(0.1)
Noncontrolling interests	0.5	—	—	—	8.4	—
Other	—	0.3	—	0.3	(0.1)	(0.9)
Effective income tax rate	18.8%	23.8%	16.9%	18.2%	7.4%	23.9%

II-188

Deferred Tax Assets and Liabilities

The tax effects of temporary differences between the carrying amounts of assets and liabilities in the financial statements of the Registrants and their respective tax bases, which give rise to deferred tax assets and liabilities, are as follows:

	December 31, 2024
	Southern Company	Alabama Power	GeorgiaPower	Mississippi Power	Southern Power	Southern Company Gas
(in millions)
Deferred tax liabilities —
Accelerated depreciation	$9,828	$2,583	$3,810	$344	$1,309	$1,575
Property basis differences	3,025	1,497	918	192	—	412
Employee benefit obligations	1,067	362	470	54	13	60
AROs	727	458	221	—	—	—
Under recovered fuel and natural gas costs	318	13	305	—	—	—
Regulatory assets –
AROs	1,886	658	1,193	35	—	—
Employee benefit obligations	746	191	237	35	—	35
Remaining book value of retired assets	360	168	187	5	—	—
Storm damage reserves	216	—	216	—	—	—
Premium on reacquired debt	57	8	48	1	—	—
Other	678	171	187	61	1	201
Total deferred income tax liabilities	18,908	6,109	7,792	727	1,323	2,283
Deferred tax assets —
AROs	2,613	1,116	1,414	35	—	—
CAMT carryforwards	40	—	18	—	—	104
ITC and PTC carryforwards	1,380	48	719	—	384	—
Employee benefit obligations	897	196	279	49	16	87
Estimated loss on plants under construction	773	—	773	—	—	—
Estimated loss on regulatory disallowance	20	—	—	—	—	20
Other state deferred tax attributes	366	—	26	224	49	16
Federal effect of net state deferred tax liabilities	402	197	100	—	23	107
Other property basis differences	176	—	75	—	85	—
State effect of federal deferred taxes	126	126	—	—	—	—
Other partnership basis differences	60	—	—	—	60	—
Regulatory liability associated with the Tax Reform Legislation (not subject to normalization)	18	18	—	—	—	—
Long-term debt fair value adjustment	73	—	—	—	—	73
Other comprehensive losses	48	3	—	—	1	—
Other	601	227	160	50	20	86
Total deferred income tax assets	7,593	1,931	3,564	358	638	493
Valuation allowance	(333)	—	(157)	(41)	(27)	(6)
Net deferred income tax assets	7,260	1,931	3,407	317	611	487
Net deferred income taxes (assets)/liabilities	$11,648	$4,178	$4,385	$410	$712	$1,796
Recognized in the balance sheets:
Accumulated deferred income taxes – assets	$(82)	$—	$—	$(82)	$—	$—
Accumulated deferred income taxes – liabilities	$11,730	$4,178	$4,385	$492	$712	$1,796

II-189

	December 31, 2023
	Southern Company	Alabama Power	GeorgiaPower	Mississippi Power	Southern Power	Southern Company Gas
(in millions)
Deferred tax liabilities —
Accelerated depreciation	$9,683	$2,566	$3,628	$339	$1,346	$1,576
Property basis differences	2,647	1,444	812	188	—	189
Employee benefit obligations	979	321	446	49	12	74
AROs	833	476	314	—	—	—
Under recovered fuel and natural gas costs	601	80	508	13	—	—
Regulatory assets –
AROs	1,902	667	1,196	39	—	—
Employee benefit obligations	797	213	260	37	—	11
Remaining book value of retired assets	369	143	221	5	—	—
Premium on reacquired debt	63	9	53	1	—	—
Other	700	182	223	43	2	191
Total deferred income tax liabilities	18,574	6,101	7,661	714	1,360	2,041
Deferred tax assets —
AROs	2,735	1,143	1,510	39	—	—
ITC and PTC carryforwards	1,387	12	691	—	481	—
Employee benefit obligations	985	224	316	52	10	89
Estimated loss on plants under construction	857	—	857	—	—	—
Estimated loss on regulatory disallowance	26	—	—	—	—	26
Other state deferred tax attributes	363	—	13	231	49	8
Federal effect of net state deferred tax liabilities	418	215	92	—	27	101
Other property basis differences	197	—	83	—	97	—
State effect of federal deferred taxes	115	115	—	—	—	—
Other partnership basis differences	85	—	—	—	85	—
Regulatory liability associated with the Tax Reform Legislation (not subject to normalization)	34	30	—	3	—	—
Long-term debt fair value adjustment	79	—	—	—	—	79
Other comprehensive losses	67	4	4	—	6	—
Other	538	188	152	57	18	74
Total deferred income tax assets	7,886	1,931	3,718	382	773	377
Valuation allowance	(206)	—	(75)	(41)	(27)	(7)
Net deferred income tax assets	7,680	1,931	3,643	341	746	370
Net deferred income taxes (assets)/liabilities	$10,894	$4,170	$4,018	$373	$614	$1,671
Recognized in the balance sheets:
Accumulated deferred income taxes – assets	$(96)	$—	$—	$(96)	$—	$—
Accumulated deferred income taxes – liabilities	$10,990	$4,170	$4,018	$469	$614	$1,671

The traditional electric operating companies and the natural gas distribution utilities have tax-related regulatory assets (deferred income tax charges) and regulatory liabilities (deferred income tax credits). The regulatory assets are primarily attributable to tax benefits flowed through to customers in prior years, deferred taxes previously recognized at rates lower than the current enacted tax law, and taxes applicable to capitalized interest. The regulatory liabilities are primarily attributable to deferred taxes previously recognized at rates higher than the current enacted tax law and to unamortized ITCs. See Note 2 for each Registrant's related balances at December 31, 2024 and 2023.

II-190

Tax Credit Carryforwards

Federal ITC/PTC carryforwards at December 31, 2024 were as follows:

	Southern Company	AlabamaPower	GeorgiaPower	SouthernPower
(in millions)
Federal ITC/PTC carryforwards	$765	$48	$147	$384
Tax year in which federal ITC/PTC carryforwards begin expiring	2031	2032	2031	2035
Year by which federal ITC/PTC carryforwards are expected to be utilized	2028	2028	2028	2028

The estimated tax credit utilization reflects the various transactions described in Note 15 and could be impacted by numerous factors, including the acquisition or construction of additional renewable projects, changes in taxable income projections, transfer of eligible credits, potential income tax rate changes, and remaining final guidance on the IRA. In the third quarter 2023 and the second quarter 2024, Georgia Power started generating advanced nuclear PTCs for Plant Vogtle Units 3 and 4, respectively, beginning on each unit's respective in-service date. In addition, pursuant to the Vogtle Joint Ownership Agreements, Georgia Power is purchasing advanced nuclear PTCs for Plant Vogtle Unit 3 and 4 from the other Vogtle Owners. See Note 2 under "Georgia Power – Nuclear Construction" for additional information on Plant Vogtle Units 3 and 4.

At December 31, 2024, Southern Company and Georgia Power also had approximately $515 million and $472 million, respectively, in net state investment and other net state tax credit carryforwards for the State of Georgia that will expire between tax years 2024 and 2033 and are not expected to be fully utilized. Southern Company and Georgia Power have a net state valuation allowance of $161 million and $124 million, respectively, associated with these carryforwards, which increased during 2024 by $101 million and $64 million, respectively.

At December 31, 2024, Southern Company and certain subsidiaries also had approximately $40 million in net CAMT carryforwards that have an indefinite carryforward period and are expected to be fully utilized by 2031.

Net Operating Loss Carryforwards

At December 31, 2024, the net state income tax benefit of state and local NOL carryforwards and associated valuation allowances for Southern Company's subsidiaries were as follows:

Company/Jurisdiction	Approximate Net State Income Tax Benefit of NOL Carryforwards	Tax Year NOLBegins Expiring	Net State Valuation Allowance for NOL Carryforwards
(in millions) · (in millions)
Mississippi Power
Mississippi	$178	2032	$(32)
Southern Power
Oklahoma	$26	2035	$(11)
Florida	10	2034	(10)
Other states	2	2034	—
Southern Power Total	$38		$(21)
Other(*)
New York	$11	2036	$(11)
New York City	14	2036	(14)
Other states	24	2025	(4)
Southern Company Total	$265		$(82)

(*)Represents other non-registrant Southern Company subsidiaries. Alabama Power, Georgia Power, and Southern Company Gas did not have material state or local NOL carryforwards at December 31, 2024.

Certain state NOLs are not expected to be fully utilized prior to expiration. The ultimate outcome of these matters cannot be determined at this time.

II-191

Unrecognized Tax Benefits

Changes in unrecognized tax benefits for the periods presented were as follows:

	SouthernCompany	GeorgiaPower	SouthernCompany Gas
(in millions)
Unrecognized tax benefits at December 31, 2021	$47	$—	$—
Tax positions changes —
Increase from prior periods	33	—	32
Unrecognized tax benefits at December 31, 2022	80	—	32
Tax positions changes —
Increase from prior periods	88	86	2
Statute of limitations expiration	(52)	(9)	—
Unrecognized tax benefits at December 31, 2023	116	77	34
Tax positions changes —
Increase from prior periods	10	—	10
Decrease from prior periods	(44)	(43)	—
Unrecognized tax benefits at December 31, 2024	$82	$34	$44

The unrecognized tax positions increase from prior periods for 2022 is primarily related to the amendment of certain 2018 state tax filing positions related to Southern Company Gas dispositions. If accepted by the states, these positions would decrease Southern Company's and Southern Company Gas' annual effective tax rates. The ultimate outcome of these unrecognized tax benefits is dependent on acceptance by each state and is not expected to be resolved within the next 12 months.

The unrecognized tax positions increase from prior periods for 2023 is primarily related to the amendment of certain 2019 through 2021 state tax filing positions related to tax credit utilization, a portion of which decreased in the fourth quarter 2023 due to a statute of limitations expiration. If effective settlement of the positions is favorable, these positions would decrease Southern Company's and Georgia Power's annual effective tax rates. The ultimate outcome of this unrecognized tax benefit, which is expected to be resolved within the next 12 months, is dependent on acceptance by the state or expiration of related statute of limitations.

The unrecognized tax positions reductions due to statute of limitations expiration for 2023 primarily relate to a 2019 state tax filing position to exclude certain gains from 2019 dispositions from taxation in a certain unitary state. This tax position and related interest was recognized in the fourth quarter 2023 and decreased Southern Company's annual effective tax rate.

The unrecognized tax positions increase from prior periods for 2024 is primarily related to a certain state tax filing position at Southern Company Gas. If effective settlement of this position is favorable, this position would decrease Southern Company's and Southern Company Gas' annual effective tax rates. The ultimate outcome is dependent on acceptance by the state.

The unrecognized tax positions decrease from prior periods for 2024 is primarily related to the 2019 and 2020 amended state filing positions related to tax credit utilization at Georgia Power.

All of the Registrants classify interest on tax uncertainties as interest expense. Accrued interest for all tax positions was immaterial for all years presented. None of the Registrants accrued any penalties on uncertain tax positions.

The IRS has finalized its audits of Southern Company's consolidated federal income tax returns through 2023. Southern Company is a participant in the Compliance Assurance Process of the IRS. The IRS selected six Southern Power partnership returns for exam for the 2020 and 2021 tax years. One audit for 2021 is still under review, and the remaining audits have been closed with no change. The ultimate outcome of this matter cannot be determined at this time. The audits for the Registrants' state income tax returns have either been concluded, or the statute of limitations has expired, for years prior to 2018.

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