CMS ENERGY CORP
For the period ended Mar 31, 2026. Filed Apr 28, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed Apr 28, 2026
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8: Income Taxes
Presented in the following table is a reconciliation of the statutory U.S. federal income tax rate to the effective income tax rate from continuing operations:
| Three Months Ended March 31 | 2026 | 2025 |
|---|---|---|
| CMS Energy, including Consumers | ||
| Income tax expense at statutory rate | 21.0% | 21.0% |
| Increase (decrease) in income taxes from: | ||
| State and local income taxes, net of federal income tax effect | 5.2 | 5.0 |
| Tax credits | ||
| Renewable energy tax credits | (6.9) | (5.6) |
| Other | (0.6) | (0.3) |
| Changes in unrecognized tax benefits1 | 5.2 | 0.8 |
| Other adjustments | ||
| Taxes attributable to noncontrolling interests | 4.6 | 0.6 |
| TCJA excess deferred taxes | (3.3) | (3.4) |
| Property differences | (1.7) | (0.3) |
| Other, net | — | (0.2) |
| Effective tax rate | 23.5% | 17.6% |
| Consumers | ||
| Income tax expense at statutory rate | 21.0% | 21.0% |
| Increase (decrease) in income taxes from: | ||
| State and local income taxes, net of federal income tax effect | 4.3 | 4.7 |
| Tax credits | ||
| Renewable energy tax credits | (4.3) | (3.0) |
| Other | (0.5) | (0.5) |
| Changes in unrecognized tax benefits1 | 4.3 | 0.7 |
| Other adjustments | ||
| TCJA excess deferred taxes | (2.5) | (3.0) |
| Property differences | (1.1) | (0.3) |
| Other, net | — | (0.3) |
| Effective tax rate | 21.2% | 19.3% |
1 The change in unrecognized tax benefits was primarily associated with Consumers’ state income tax claim.
State Income Tax Claim: In February 2025, CMS Energy received an adverse ruling from the Michigan Tax Tribunal in regards to the methodology of state apportionment for Consumers’ electricity sales to MISO. In March 2025, CMS Energy filed an appeal with the Michigan Court of Appeals. The Court issued an opinion in the appeal in February 2026, affirming the Michigan Tax Tribunal’s ruling. CMS Energy plans to file a request for leave to appeal the Michigan Court of Appeals’ decision to the Michigan Supreme Court (which may or may not be granted).
CMS Energy and Consumers evaluated and increased their uncertain tax positions associated with this matter, recognizing an $18 million increase to income tax expense during 2026. While CMS Energy and Consumers are confident in the merits of their position, if the appeal to the Michigan Supreme Court was unsuccessful, the companies would be required to revise the estimated value of their state deferred tax liabilities, which could result in a material impact to their results of operations.
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