FIRSTENERGY CORP
For the period ended Sep 30, 2026. Filed Oct 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.
Sep 30, 2026 · Filed Oct 28, 2026
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Income Taxes
- INCOME TAXES
The Registrants’ interim effective income tax rates reflect the estimated annual effective income tax rates for 2026 and 2025. These tax rates are affected by estimated annual permanent items, such as AFUDC equity and other flow-through items, as well as certain discrete items.
The following table reconciles the FirstEnergy effective income tax rate to the federal income tax statutory rate for the three and nine months ended September 30, 2026, and 2025:
| FirstEnergy · For the Three Months Ended September 30, · For the Nine Months Ended September 30, | ||||||||
|---|---|---|---|---|---|---|---|---|
| (In millions) | 2026 | 2025 | 2026 | 2025 | ||||
| Amount | % | Amount | % | Amount | % | Amount | % | |
| Income before income taxes | $684 | $610 | $1,732 | $1,556 | ||||
| Federal statutory income tax | $143 | 21.0% | $128 | 21.0% | $364 | 21.0% | $327 | 21.0% |
| Federal: | ||||||||
| Tax credits | — | —% | (1) | (0.2)% | (7) | (0.4)% | (2) | (0.1)% |
| Nontaxable and Nondeductible: | ||||||||
| AFUDC equity income | (7) | (1.0)% | (6) | (1.0)% | (20) | (1.2)% | (16) | (1.0)% |
| AFUDC equity depreciation | 1 | 0.1% | 1 | 0.2% | 3 | 0.2% | 2 | 0.1% |
| Tax related to FE's equity investment in FET | 4 | 0.6% | 4 | 0.7% | 14 | 0.8% | 12 | 0.8% |
| Other: | ||||||||
| Excess deferred tax amortization | (22) | (3.2)% | (8) | (1.3)% | (48) | (2.8)% | (33) | (2.1)% |
| Remeasurement of excess deferred income taxes | — | —% | (70) | (11.5)% | — | —% | (70) | (4.5)% |
| Federal and state related flow-through | (14) | (2.0)% | (9) | (1.5)% | (26) | (1.5)% | (20) | (1.3)% |
| Deferred taxes associated with FET Equity Interest Sale | — | —% | 6 | 1.0% | — | —% | 6 | 0.4% |
| Other | (4) | (0.5)% | (1) | (0.2)% | 4 | 0.1% | (4) | (0.3)% |
| Changes in unrecognized tax benefits | (69) | (10.1)% | — | —% | (80) | (4.6)% | — | —% |
| State and municipal income taxes, net of federal effect (1) | 37 | 5.4% | 34 | 5.6% | 95 | 5.5% | 90 | 5.8% |
| Total income taxes (2) | $69 | 10.1% | $78 | 12.8% | $299 | 17.3% | $292 | 18.8% |
(1) Pennsylvania makes up the majority of FirstEnergy’s domestic state income taxes, net of federal effect.
(2)There were no amounts for the three and nine months ended September 30, 2026, or 2025, related to cross-border tax laws, changes in laws or rates, changes in valuation allowance, or foreign tax effects.
The following table reconciles the FE PA effective income tax rate to the federal income tax statutory rate for the three and nine months ended September 30, 2026 and 2025:
| FE PA · For the Three Months Ended September 30, · For the Nine Months Ended September 30, | ||||||||
|---|---|---|---|---|---|---|---|---|
| (In millions) | 2026 | 2025 | 2026 | 2025 | ||||
| Amount | % | Amount | % | Amount | % | Amount | % | |
| Income before income taxes | $192 | $166 | $529 | $509 | ||||
| Federal statutory income tax | $40 | 21.0% | $35 | 21.0% | $111 | 21.0% | $107 | 21.0% |
| Federal: | ||||||||
| Tax credits | — | —% | — | —% | — | —% | (1) | (0.2)% |
| Nontaxable and Nondeductible - | ||||||||
| AFUDC equity income | — | —% | — | —% | (1) | (0.2)% | (1) | (0.2)% |
| Other - | ||||||||
| Excess deferred tax amortization | (6) | (3.1)% | (2) | (1.2)% | (11) | (2.1)% | (5) | (1.0)% |
| Federal and state related flow-through | (17) | (8.9)% | (9) | (5.4)% | (27) | (5.1)% | (17) | (3.3)% |
| Other | (3) | (1.7)% | (2) | (1.1)% | (1) | (0.2)% | (1) | (0.2)% |
| Changes in unrecognized tax benefits | — | —% | — | —% | (1) | (0.2)% | — | —% |
| State income taxes, net of federal effect (1) | 11 | 5.7% | 10 | 6.0% | 31 | 5.9% | 32 | 6.3% |
| Total income taxes (2) | $25 | 13.0% | $32 | 19.3% | $101 | 19.1% | $114 | 22.4% |
(1) Pennsylvania makes up FE PA's domestic state income taxes, net of federal effect.
(2)There were no amounts for the three and nine months ended September 30, 2026 and 2025, for FE PA related to changes in valuation allowances, cross-border tax laws, changes in laws or rates, or foreign tax effects.
The following table reconciles the JCP&L effective income tax rate to the federal income tax statutory rate for the three and nine months ended September 30, 2026, and 2025:
| JCP&L · For the Three Months Ended September 30, · For the Nine Months Ended September 30, | ||||||||
|---|---|---|---|---|---|---|---|---|
| (In millions) | 2026 | 2025 | 2026 | 2025 | ||||
| Amount | % | Amount | % | Amount | % | Amount | % | |
| Income before income taxes | $158 | $158 | $351 | $303 | ||||
| Federal statutory income tax | $33 | 21.0% | $33 | 21.0% | $74 | 21.0% | $64 | 21.0% |
| Federal: | ||||||||
| Tax credits | — | —% | — | —% | (1) | (0.3)% | — | —% |
| Nontaxable and Nondeductible: | ||||||||
| AFUDC equity income | (1) | (0.6)% | (2) | (1.3)% | (4) | (1.1)% | (2) | (0.7)% |
| Other: | ||||||||
| Excess deferred tax amortization | (4) | (2.6)% | (1) | (0.6)% | (7) | (2.0)% | (3) | (1.0)% |
| Federal and state related flow-through | (1) | (0.6)% | 1 | 0.6% | (1) | (0.3)% | (3) | (1.0)% |
| Other | (2) | (1.4)% | (2) | (1.4)% | (2) | (0.5)% | (1) | (0.2)% |
| State income taxes, net of federal effect (1) | 11 | 7.0% | 11 | 7.0% | 25 | 7.1% | 21 | 7.0% |
| Total income taxes (2) | $36 | 22.8% | $40 | 25.3% | $84 | 23.9% | $76 | 25.1% |
(1) New Jersey makes up JCP&L’s domestic state income taxes, net of federal effect.
(2)There were no amounts for the three and nine months ended September 30, 2026, or 2025, related to cross-border tax laws, changes in laws or rates, changes in valuation allowances, changes in unrecognized tax benefits, or foreign tax effects.
For federal income tax purposes, FE files a consolidated tax return, which includes JCP&L and FE PA, but excludes FET and its subsidiaries, and maintains an intercompany income tax allocation agreement for the allocation of consolidated tax liability, including corporate AMT. Subsequent to the closing of the FET Equity Interest Sale, FET and its subsidiaries file as their own consolidated group for federal income tax purposes and have their own intercompany income tax allocation agreement.
In the third quarter of 2026, FirstEnergy recognized a state tax benefit of approximately $69 million due to an uncertain tax position being effectively settled.
On February 18, 2026, the U.S. Treasury and IRS issued guidance that allows certain tax repair deductions in computing corporate AMT. As a result of this guidance, FirstEnergy reversed $18 million in corporate AMT credit carryforwards in the first quarter of 2026 related to corporate AMT incurred and paid in prior tax years by both the FE consolidated tax group and the FET consolidated tax group, none of which had an impact to the effective tax rate. Both the FE consolidated tax group and the FET consolidated tax group remain subject to the corporate AMT, but expect that this allowance for certain tax repair deductions will reduce future corporate AMT liability.
On July 4, 2025, President Trump signed into law the OBBBA, which makes permanent certain corporate tax incentives from the TCJA but which are not expected to materially impact FirstEnergy. The OBBBA also accelerates the phase out of tax credits for wind and solar projects and, accordingly, FirstEnergy is evaluating potential impacts those tax credit provisions and related IRS guidance may have on the proposed construction of solar generation facilities in West Virginia, as discussed in Note 9., “Regulatory Matters,” of the Combined Notes to Financial Statements of the Registrants.
During 2025, FERC issued orders to a non-affiliate concluding that, based on certain previously issued IRS private letter rulings, certain NOL carryforward deferred tax assets, as computed on a separate return basis, should be included in rate base for ratemaking purposes. FirstEnergy determined in the third quarter of 2025 that these rulings and orders also would apply to certain of its subsidiaries, resulting in a benefit from a reduction in regulatory liabilities, reflected as the remeasurement of excess deferred income taxes and an increase in accumulated deferred income tax assets for ratemaking purposes. FirstEnergy made the appropriate updates in its annual formula rates for the impacted subsidiaries.
FirstEnergy will continue to monitor and evaluate future tax legislation, guidance from the U.S. Treasury and/or the IRS, including guidance related to the corporate AMT, and developments concerning the regulatory treatment of income taxes by FERC and/or applicable state regulatory authorities, that could negatively impact the Registrants’ cash flows, results of operations and financial condition.
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