NISOURCE INC.

12. Income Taxes

Our interim effective tax rates reflect the estimated annual effective tax rates for 2025 and 2024 applied to year-to-date pretax income, adjusted for tax expense associated with certain discrete items. The effective tax rates for the three months ended September 30, 2025 and 2024 were 16.1% and 14.1%, respectively. The effective tax rates for the nine months ended September 30, 2025 and 2024 were 17.0% and 15.4%, respectively. These effective tax rates differ from the federal statutory tax rate of 21% primarily due to net income attributable to noncontrolling interest, amortization of excess deferred income taxes, federal tax credits net of deferred regulatory liabilities, state income taxes, and other permanent book-to-tax differences.

The increase in the three month effective tax rate of 2.0% in 2025 compared to 2024 is primarily driven by changes in net income attributable to noncontrolling interest, lower AFUDC equity and increases to other permanent differences, partially offset by lower state income taxes.

The increase in the nine month effective tax rate of 1.6% in 2025 compared to 2024 is primarily driven by lower AFUDC equity and changes in net income attributable to noncontrolling interest.

As of September 30, 2025, there have been no material changes to our unrecognized tax benefits or possible changes that could reasonably be expected to occur during the next twelve months. See Note 15 to the Company’s Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2024, for a discussion of these unrecognized tax benefits.

On July 4, 2025, President Donald J. Trump enacted the One Big Beautiful Bill Act ("OBBBA"), which introduced significant federal tax and spending reforms. After evaluation, management determined that the OBBBA does not currently have a material effect on the Company’s financial statements. The Company will continue to monitor the bill’s implementation and will update its financial disclosures as needed should material impacts arise under applicable accounting standards.