ALABAMA POWER CO

(G)INCOME TAXES

See Note 10 to the financial statements in Item 8 of the Form 10-K for additional tax information.

Cash Paid for Income Taxes

Alabama Power, Georgia Power, and Southern Power have 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. The discount is recorded as a reduction in tax credits recognized in the financial statements and does not have a material impact on results of operations. During the first nine months of 2026, Alabama Power, Georgia Power, and Southern Power received cash of $44 million, $116 million, and $110 million, respectively, from credits transferred. The Southern Company system continues to explore the ability to efficiently monetize its tax credits through third-party transfer agreements.

During the first nine months of 2026, pursuant to certain joint ownership agreements, Georgia Power paid $130 million to the other Vogtle Owners for advanced nuclear PTCs for Plant Vogtle Units 3 and 4. The gain was recognized as an income tax benefit and was immaterial.

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.

Details of significant changes in the effective tax rate for the applicable Registrants are provided herein. Alabama Power and Mississippi Power had no significant changes for the nine months ended September 30, 2026 compared to the corresponding period in 2025.

Southern Company's effective tax rate was 16.2% for the nine months ended September 30, 2026 compared to 20.3% for the corresponding period in 2025. The effective tax rate decrease was primarily due to an increase in federal PTCs resulting from Southern Power's purchase of the noncontrolling membership interests in the SP Wind tax equity partnership, an increase in amortization of federal PTCs and ITCs at Georgia Power, and a decrease in charges to a valuation allowance on certain state tax credit carryforwards at Georgia Power, partially offset by a decrease in the flowback of excess state deferred income taxes at Georgia Power and a change in tax benefits related to the extinguishments of debt. See "Unrecognized Tax Benefits" herein for additional information.

Georgia Power's effective tax rate was 15.3% for the nine months ended September 30, 2026 compared to 20.0% for the corresponding period in 2025. The effective tax rate decrease was primarily due to an increase in amortization of federal PTCs and ITCs and a decrease in charges to a valuation allowance on certain state tax credit carryforwards, partially offset by a decrease in the flowback of excess state deferred income taxes.

Southern Power's effective tax benefit rate was (139.4)% for the nine months ended September 30, 2026 compared to an effective tax rate of 6.0% for the corresponding period in 2025. Accelerated depreciation related to wind repowering projects, which decreased Southern Power's pre-tax earnings, impacted the effective tax rate for both periods. The remaining change was primarily due to an increase in federal PTCs resulting from Southern Power's purchase of the noncontrolling membership interests in the SP Wind tax equity partnership. See Note (K) under "Southern Power – Wind Repowering Projects" and Notes 5 and 15 to the financial statements under "Depreciation and Amortization – Southern Power" and "Southern Power – Purchase of Renewable Facility Interests," respectively, in Item 8 of the Form 10-K for additional information.

Southern Company Gas' effective tax rate was 23.7% for the nine months ended September 30, 2026 compared to 23.5% for the corresponding period in 2025. The effective tax rate increase was primarily due to a decrease in the flowback of excess state deferred income taxes, partially offset by an increase in tax benefits related to certain state tax filing positions.

Unrecognized Tax Benefits

Southern Company's and Southern Company Gas' unrecognized tax position balances at September 30, 2026 were $87 million and $25 million, respectively. Alabama Power and Georgia Power hadno unrecognized tax position balances at September 30, 2026. At December 31, 2025, Southern Company's, Alabama Power's, Georgia Power's, and Southern Company Gas' unrecognized tax position balances were $170 million, $50 million, $72 million, and $44 million, respectively. The decreases from prior periods for Alabama Power and Georgia Power resulted from the reversal of unrecognized tax positions associated with their 2025 zero-emission nuclear power PTCs. The PTC-related reversals did not impact Alabama Power's and Georgia Power's effective tax rates. The decrease from prior periods for Southern Company Gas was primarily related to certain state tax filing positions. These decreases were partially offset by approximately $59 million of unrecognized tax benefits recorded by Southern Company during the third quarter 2026 related to the extinguishments of debt. See Note (F) under "Convertible Senior Notes" and Note 8 to the financial statements under "Convertible Senior Notes" in Item 8 of the Form 10-K for additional information regarding the extinguishment of debt.