KENTUCKY UTILITIES CO
For the period ended Sep 30, 2026. Filed Nov 6, 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.
Sep 30, 2026 · Filed Nov 6, 2026
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5. Income Taxes
- Income Taxes
Reconciliations of income tax expense (benefit) for the periods ended September 30 are as follows:
| (PPL) | ||||
|---|---|---|---|---|
| Three Months | Nine Months | |||
| 2026 | 2025 | 2026 | 2025 | |
| Federal income tax on Income Before Income Taxes at statutory tax rate | $95 | $84 | $273 | $240 |
| Increase (decrease) due to: | ||||
| State income taxes, net of federal income tax benefit (a) | 24 | 19 | 63 | 57 |
| Tax credits (federal): | ||||
| Investment tax credits | (3) | (3) | (9) | (7) |
| Other tax credits | (3) | — | (4) | (1) |
| Subtotal | (6) | (3) | (13) | (8) |
| Utility rate-making tax adjustments (federal and state): | ||||
| Amortization of excess deferred income taxes | (14) | (13) | (40) | (36) |
| AFUDC Equity | (8) | (5) | (21) | (14) |
| Flow-through rate-making (b) | (5) | (3) | (13) | (12) |
| Subtotal | (27) | (21) | (74) | (62) |
| Other | — | 1 | 1 | 2 |
| Total increase (decrease) | (9) | (4) | (23) | (11) |
| Total income tax expense | $86 | $80 | $250 | $229 |
(a) Jurisdictions that comprise the majority of state income taxes, net of federal effect, are Kentucky and Pennsylvania.
(b) Flow-through occurs when the regulator excludes deferred tax expense or benefit from recoverable costs when determining income tax expense.
| (PPL Electric) | ||||
|---|---|---|---|---|
| Three Months | Nine Months | |||
| 2026 | 2025 | 2026 | 2025 | |
| Taxes at statutory tax rate | $52 | $44 | $138 | $132 |
| Increase (decrease) due to: | ||||
| State income taxes, net of federal income tax benefit (a) | 16 | 13 | 40 | 39 |
| Utility rate-making tax adjustments (federal and state): | ||||
| Amortization of excess deferred income taxes | (2) | (3) | (6) | (7) |
| AFUDC Equity | (3) | (2) | (8) | (5) |
| Flow-through rate-making (b) | (4) | (3) | (12) | (12) |
| Subtotal | (9) | (8) | (26) | (24) |
| Other | (3) | — | (3) | (1) |
| Total increase (decrease) | 4 | 5 | 11 | 14 |
| Total income tax expense | $56 | $49 | $149 | $146 |
(a) The jurisdiction that comprises the majority of state income taxes, net of federal effect, is Pennsylvania.
(b) Flow-through occurs when the regulator excludes deferred tax expense or benefit from recoverable costs when determining income tax expense.
| (LG&E) | ||||
|---|---|---|---|---|
| Three Months | Nine Months | |||
| 2026 | 2025 | 2026 | 2025 | |
| Taxes at statutory tax rate | $27 | $22 | $78 | $64 |
| Increase (decrease) due to: | ||||
| State income taxes, net of federal income tax benefit (a) | 5 | 4 | 14 | 12 |
| Utility rate-making tax adjustments (federal and state): | ||||
| Amortization of excess deferred income taxes | (4) | (3) | (12) | (11) |
| AFUDC Equity | (2) | (1) | (5) | (3) |
| Subtotal | (6) | (4) | (17) | (14) |
| Other | — | (1) | — | (1) |
| Total increase (decrease) | (1) | (1) | (3) | (3) |
| Total income tax expense | $26 | $21 | $75 | $61 |
(a) The jurisdiction that comprises the majority of state income taxes, net of federal effect, is Kentucky.
| (KU) | ||||
|---|---|---|---|---|
| Three Months | Nine Months | |||
| 2026 | 2025 | 2026 | 2025 | |
| Taxes at statutory tax rate | $32 | $29 | $91 | $82 |
| Increase (decrease) due to: | ||||
| State income taxes, net of federal income tax benefit (a) | 6 | 5 | 16 | 15 |
| Utility rate-making tax adjustments (federal and state): | ||||
| Amortization of excess deferred income taxes | (5) | (4) | (14) | (14) |
| AFUDC Equity | (2) | (1) | (5) | (3) |
| Subtotal | (7) | (5) | (19) | (17) |
| Other | — | (1) | (2) | (2) |
| Total increase (decrease) | (1) | (1) | (5) | (4) |
| Total income tax expense | $31 | $28 | $86 | $78 |
(a) The jurisdiction that comprises the majority of state income taxes, net of federal effect, is Kentucky.
Other
One Big Beautiful Bill Act(All Registrants)
On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act. The Registrants are continuing to review the law and applicable guidance from the IRS to assess any material impacts to the financial statements.
Additionally, on July 7, 2025, President Trump issued an Executive Order directing the Treasury to take action to strictly enforce the termination of clean energy tax credits under Internal Revenue Code (IRC) Sections 45Y and 48E for wind and solar. On August 15, 2025, the IRS issued Notice 2025-42, primarily tightening the rules regarding when a solar project is considered to have commenced construction. In addition, the One Big Beautiful Bill Act included new rules addressing Foreign Entities of Concern (FEOC). These rules are supply‑chain, foreign entity ownership and debt issuance restrictions that may limit eligibility for certain U.S. clean energy tax credits such as those provided for in IRC Sections 45Y and 48E.
On February 12, 2026, the Treasury and the IRS issued Notice 2026-15, which provides interim guidance on the FEOC restrictions on certain clean energy tax credits. Additionally, the IRS is expected to issue further guidance on the tax provisions of the One Big Beautiful Bill Act. The Registrants do not currently anticipate these rules or guidance to result in material limitations on its clean energy projects and associated tax credits but will continue to monitor closely.
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