PPL Corp

For the period ended Dec 31, 2024. Filed Feb 13, 2025.

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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.

FY2024 · Filed Feb 13, 2025

PPLC$46.33-0.1%Stored close · as of Nov 10, 2026

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Contents

6. Income and Other Taxes

Income and Other Taxes

(PPL)

"Income from Continuing Operations Before Income Taxes" is from domestic operations.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for accounting purposes and their basis for income tax purposes and the tax effects of net operating loss and tax credit carryforwards. The provision for PPL's deferred income taxes for regulated assets and liabilities is based upon the ratemaking principles of the applicable jurisdiction. See Notes 1 and 7 for additional information.

Net deferred tax assets have been recognized based on management's estimates of future taxable income.

Significant components of PPL's deferred income tax assets and liabilities were as follows:

	2024	2023
Deferred Tax Assets
Deferred investment tax credits	28	28
Regulatory liabilities	133	123
Income taxes due to customers	418	436
Accrued pension and postretirement costs	112	101
State loss carryforwards	224	253
Federal and state tax credit carryforwards	24	67
Internal Revenue Code Section 197 intangibles	72	78
Contributions in aid of construction	163	149
Bad debt	37	28
Other	114	111
Valuation allowances	(224)	(245)
Total deferred tax assets	1,101	1,129
Deferred Tax Liabilities
Plant - net	3,898	3,749
Regulatory assets	432	376
Prepayments	39	47
Goodwill	38	22
Other	38	30
Total deferred tax liabilities	4,445	4,224
Net deferred tax liability	$3,344	$3,095

State deferred taxes are determined by entity and by jurisdiction. As a result, $12 million and $9 million of net deferred tax assets are shown as "Other noncurrent assets" on the Balance Sheets for 2024 and 2023.

At December 31, 2024, PPL had the following loss and tax credit carryforwards, related deferred tax assets and valuation allowances recorded against the deferred tax assets:

	Gross	Deferred Tax Asset	Valuation Allowance	Expiration
Loss and other carryforwards
State net operating losses	$5,011	$224	$(221)	2025-2044
State charitable contributions	10	1	(1)	2025-2029
Foreign capital loss	8	2	(2)	Indefinite

Gross · Deferred Tax Asset · Valuation Allowance · Expiration
Credit carryforwards
Federal - other	14	—	2044
State recycling credit	8	—	2028
State - other	2	—	Indefinite

Valuation allowances have been established for the amount that, more likely than not, will not be realized. The changes in deferred tax valuation allowances were as follows:

Additions
Balance atBeginningof Period · Chargedto Income · Charged toOtherAccounts · Deductions · Balanceat Endof Period
2024	$245	$3	$1	$25(a)	$224
2023	213	54(b)	—	22(c)	245
2022	462	10	—	259(d)	213

(a)In 2024, PPL recorded a $23 million decrease in a valuation allowance on a 2004 state net operating loss carryforward that expired in 2024.

(b)PPL has a Pennsylvania net operating loss fully offset by a valuation allowance. In 2023, PPL adjusted the net operating loss and related valuation allowance to be recorded at the current estimate of the applicable rate at which each portion of the net operating loss that will expire and be written off as the rate is reduced annually by one half a percentage point until the rate reaches to 4.99% in 2031.

(c)In 2023, PPL recorded a $22 million decrease in a valuation allowance on a 2003 state net operating loss carryforward that expired in 2023.

(d)In 2022, PPL recorded a $36 million decrease in a valuation allowance on a 2002 state net operating loss carryforward that expired in 2022 and a $213 million decrease in the valuation allowance due to the Pennsylvania rate change. See reconciliation of income tax table below.

Details of the components of income tax expense, a reconciliation of federal income taxes derived from statutory tax rates applied to "Income Before Income Taxes" to income taxes for reporting purposes, and details of "Taxes, other than income" were as follows:

	2024	2023	2022
Income Tax Expense (Benefit)
Current - Federal (a)	$23	$(175)	$(2)
Current - State	9	37	24
Total Current Expense (Benefit)	32	(138)	22
Deferred - Federal (a)	137	286	122
Deferred - State	64	48	68
Total Deferred Expense (Benefit), excluding operating loss carryforwards	201	334	190
Amortization of investment tax credit	(3)	(3)	(3)
Tax expense (benefit) of operating loss carryforwards
Deferred - Federal	1	3	2
Deferred - State	(3)	(12)	(10)
Total Tax Expense (Benefit) of Operating Loss Carryforwards	(2)	(9)	(8)
Total income tax expense (benefit)	$228	$184	$201
Total income tax expense (benefit) - Federal	$158	$111	$119
Total income tax expense (benefit) - State	70	73	82
Total income tax expense (benefit)	$228	$184	$201

(a)In 2023, PPL purchased approximately $300 million of renewable tax credits and recorded a current tax benefit and a deferred tax expense for utilization of approximately $250 million of the credits in 2023 and prior years, per the three-year carry-back rule.

In the table above, the following income tax expense (benefit) are excluded from income taxes:

	2024	2023	2022
Discontinued operations	$—	$—	$(42)
Other comprehensive income	(8)	(14)	11
Valuation allowance recorded to other comprehensive income	—	(1)	—
Total	$(8)	$(15)	$(31)

	2024	2023	2022
Reconciliation of Income Tax Expense (Benefit)
Federal income tax on Income Before Income Taxes at statutory tax rate - 21%	$234	$194	$192
State income taxes, net of federal income tax benefit	65	58	68
Valuation allowance adjustments (a)	2	12	9
Income tax credits (b)	(8)	(22)	(3)
Utility rate-making tax adjustments (c)	(21)	(10)	(8)
Amortization of excess deferred federal and state income taxes	(45)	(48)	(54)
Other	1	—	(3)
Total increase (decrease)	(6)	(10)	9
Total income tax expense (benefit)	$228	$184	$201
Effective income tax rate	20.4%	19.9%	22.0%

(a)In 2024, 2023, and 2022, PPL recorded deferred income tax expense of $3 million, $11 million and $5 million for valuation allowances primarily related to increased Pennsylvania net operating loss carryforwards expected to be unutilized.

(b)In 2023, PPL purchased approximately $300 million of renewable tax credits and recorded a current tax benefit and a deferred tax expense for utilization of approximately $250 million of the credits in 2023 and prior years, per the three-year carry-back rule.

(c)Primarily consists of tax impacts of AFUDC equity and related depreciation across PPL utilities and flow through tax impacts. Flow through occurs when the regulator excludes deferred tax expense or benefit from recoverable costs when determining income tax expense.

	2024	2023	2022
Taxes, other than income
State gross earnings and state gross receipts	$167	$195	$175
Property and other	207	197	157
Total	$374	$392	$332

The provision for PPL Electric's deferred income taxes for regulated assets and liabilities is based upon the ratemaking principles reflected in rates established by the PAPUC and the FERC. The difference in the provision for deferred income taxes for regulated assets and liabilities and the amount that otherwise would be recorded under GAAP is deferred and included in "Regulatory assets" or "Regulatory liabilities" on the Balance Sheets.

Significant components of PPL Electric's deferred income tax assets and liabilities were as follows:

	2024	2023
Deferred Tax Assets
Accrued pension and postretirement costs	$36	$30
Contributions in aid of construction	120	105
Regulatory liabilities	40	43
Income taxes due to customers	184	191
Other	22	27
Total deferred tax assets	402	396
Deferred Tax Liabilities
Electric utility plant - net	1,934	1,810
Regulatory assets	160	119
Prepayments	30	36
Other	4	4
Total deferred tax liabilities	2,128	1,969
Net deferred tax liability	$1,726	$1,573

PPL Electric expects to have adequate levels of taxable income to realize its recorded deferred income tax assets.

	2024	2023	2022
Income Tax Expense (Benefit)
Current - Federal	$44	$91	$63
Current - State	4	31	20
Total Current Expense (Benefit)	48	122	83
Deferred - Federal	86	28	60
Deferred - State	42	18	31
Total Deferred Expense (Benefit), excluding operating loss carryforwards	128	46	91
Total income tax expense (benefit)	$176	$168	$174
Total income tax expense (benefit) - Federal	$130	$119	$123
Total income tax expense (benefit) - State	46	49	51
Total income tax expense (benefit)	$176	$168	$174

	2024	2023	2022
Reconciliation of Income Tax Expense (Benefit)
Federal income tax on Income Before Income Taxes at statutory tax rate - 21%	$158	$144	$147
Increase (decrease) due to:
State income taxes, net of federal income tax benefit	47	49	54
Utility rate-making tax adjustments (a)	(16)	(9)	(7)
Amortization of excess deferred federal income taxes (b)	(10)	(11)	(12)
State income tax rate change (c)	—	—	(9)
Other	(3)	(5)	1
Total increase (decrease)	18	24	27
Total income tax expense (benefit)	$176	$168	$174
Effective income tax rate	23.5%	24.5%	24.9%

(a)Primarily consists of tax impacts of AFUDC equity and related depreciation across PPL utilities and flow through tax impacts. Flow through occurs when the regulator excludes deferred tax expense or benefit from recoverable costs when determining income tax expense.

(b)In 2024, 2023, and 2022, PPL Electric recorded lower income tax expense for the amortization of excess deferred taxes that primarily resulted from the U.S. federal corporate income tax rate reduction from 35% to 21% enacted by the TCJA. This amortization represents each year's refund amount, prior to a tax gross-up, to be paid to customers for previously collected deferred taxes at higher income tax rates.

	2024	2023	2022
Taxes, other than income
State gross receipts	$122	$136	$142
Property and other	9	7	7
Total	$131	$143	$149

(LG&E)

The provision for LG&E's deferred income taxes for regulated assets and liabilities is based upon the ratemaking principles reflected in rates established by the KPSC and the FERC. The difference in the provision for deferred income taxes for regulated assets and liabilities and the amount that otherwise would be recorded under GAAP is deferred and included in "Regulatory assets" or "Regulatory liabilities" on the Balance Sheets.

Significant components of LG&E's deferred income tax assets and liabilities were as follows:

	2024	2023
Deferred Tax Assets
Contributions in aid of construction	$18	$18
Regulatory liabilities	18	19
Accrued pension and postretirement costs	4	3
Deferred investment tax credits	7	8
Income taxes due to customers	110	115
State tax credit carryforwards	6	8
Lease liabilities	4	4
Valuation allowances	(6)	(8)
Other	6	8
Total deferred tax assets	167	175
Deferred Tax Liabilities
Plant - net	875	877
Regulatory assets	88	67
Lease right-of-use assets	4	3
Other	3	4
Total deferred tax liabilities	970	951
Net deferred tax liability	$803	$776

At December 31, 2024, LG&E had $6 million of state credit carryforwards that expire in 2028 and a $6 million valuation allowance related to state credit carryforwards due to insufficient projected Kentucky taxable income.

	2024	2023	2022
Income Tax Expense (Benefit)
Current - Federal	$60	$70	$60
Current - State	11	13	9
Total Current Expense (Benefit)	71	83	69
Deferred - Federal	1	(15)	(10)
Deferred - State	6	2	5
Total Deferred Expense (Benefit)	7	(13)	(5)
Amortization of investment tax credit - Federal	(1)	(1)	(1)
Total income tax expense (benefit)	$77	$69	$63
Total income tax expense (benefit) - Federal	$60	$54	$49
Total income tax expense (benefit) - State	17	15	14
Total income tax expense (benefit)	$77	$69	$63

	2024	2023	2022
Reconciliation of Income Tax Expense (Benefit)
Federal income tax on Income Before Income Taxes at statutory tax rate - 21%	$79	$70	$70
Increase (decrease) due to:
State income taxes, net of federal income tax benefit	14	13	13
Amortization of excess deferred federal and state income taxes	(13)	(13)	(18)
Other	(3)	(1)	(2)
Total increase (decrease)	(2)	(1)	(7)
Total income tax expense (benefit)	$77	$69	$63
Effective income tax rate	20.6%	20.6%	18.8%

	2024	2023	2022
Taxes, other than income
Property and other	$49	$48	$48
Total	$49	$48	$48

(KU)

The provision for KU's deferred income taxes for regulated assets and liabilities is based upon the ratemaking principles reflected in rates established by the KPSC, the VSCC and the FERC. The difference in the provision for deferred income taxes for regulated assets and liabilities and the amount that otherwise would be recorded under GAAP is deferred and included in "Regulatory assets" or "Regulatory liabilities" on the Balance Sheets.

Significant components of KU's deferred income tax assets and liabilities were as follows:

	2024	2023
Deferred Tax Assets
Contributions in aid of construction	$12	$10
Regulatory liabilities	29	23
Deferred investment tax credits	20	21
Income taxes due to customers	124	131
State tax credit carryforwards	4	4
Lease liabilities	6	5
Valuation allowances	(2)	(2)
Other	4	5
Total deferred tax assets	197	197
Deferred Tax Liabilities
Plant - net	1,053	1,045
Regulatory assets	55	50
Pension and postretirement costs	6	7
Lease right-of-use assets	6	5
Other	1	2
Total deferred tax liabilities	1,121	1,109
Net deferred tax liability	$924	$912

At December 31, 2024, KU had $4 million of state credit carryforwards of which $2 million will expire in 2028 and $2 million that has an indefinite carryforward period. At December 31, 2024, KU had a $2 million valuation allowance related to state credit carryforwards due to insufficient projected Kentucky taxable income.

	2024	2023	2022
Income Tax Expense (Benefit)
Current - Federal	$87	$73	$63
Current - State	17	13	11
Total Current Expense (Benefit)	104	86	74
Deferred - Federal	(15)	(11)	(3)
Deferred - State	2	4	7
Total Deferred Expense (Benefit)	(13)	(7)	4
Amortization of investment tax credit - Federal	(2)	(2)	(2)
Total income tax expense (benefit)	$89	$77	$76
Total income tax expense (benefit) - Federal	$70	$60	$58
Total income tax expense (benefit) - State	19	17	18
Total income tax expense (benefit)	$89	$77	$76

	2024	2023	2022
Reconciliation of Income Tax Expense (Benefit)
Federal income tax on Income Before Income Taxes at statutory tax rate - 21%	$93	$82	$84
Increase (decrease) due to:
State income taxes, net of federal income tax benefit	16	15	16
Amortization of investment tax credit	(2)	(2)	(2)
Amortization of excess deferred federal and state income taxes	(17)	(17)	(21)
Other	(1)	(1)	(1)
Total decrease	(4)	(5)	(8)
Total income tax expense (benefit)	$89	$77	$76
Effective income tax rate	20.0%	19.8%	19.1%

	2024	2023	2022
Taxes, other than income
Property and other	$49	$45	$45
Total	$49	$45	$45

Unrecognized Tax Benefits

PPL or its subsidiaries file tax returns infour major tax jurisdictions. The income tax provisions for PPL Electric, LG&E and KU are calculated in accordance with an intercompany tax sharing agreement, which provides that taxable income be calculated as if each domestic subsidiary filed a separate consolidated return. PPL Electric or its subsidiaries indirectly or directly file tax returns inthree major tax jurisdictions, and LG&E and KU indirectly or directly file tax returns intwo major tax jurisdictions. With few exceptions, at December 31, 2024, these jurisdictions, as well as the tax years that are no longer subject to examination, were as follows.

	PPL	PPL Electric	LG&E	KU
U.S. (federal)	2020 and prior	2020 and prior	2020 and prior	2020 and prior
Pennsylvania (state)	2020 and prior	2020 and prior
Kentucky (state)	2019 and prior	2019 and prior	2019 and prior	2019 and prior

Other

Transfer of Certain Credits under the Inflation Reduction Act(PPL)

The IRS released the final Internal Revenue Code Section 6418 regulations related to the transfer of certain credits under the Inflation Reduction Act. The regulations became effective on July 1, 2024 and did not and are not expected to have a material impact on the financial statements regarding prior or future credit transfers.

IRS Revenue Procedure 2023-15(PPL and LG&E)

On April 14, 2023, the IRS issued Revenue Procedure 2023-15, which provides a safe harbor method of accounting that taxpayers may use to determine whether expenses to repair, maintain, replace, or improve natural gas transmission and distribution property must be capitalized for tax purposes. PPL and LG&E are currently reviewing the revenue procedure to determine what impact the guidance may have on their financial statements.

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