PRINCIPAL FINANCIAL GROUP INC
For the period ended Jun 30, 2024. Filed Jul 31, 2024.
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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.
Jun 30, 2024 · Filed Jul 31, 2024
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11.Income Taxes
Effective Income Tax Rate
Our provision for income taxes may not have the customary relationship of taxes to income. A reconciliation between the U.S. corporate income tax rate and the effective income tax rate was as follows:
| | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| · · For the three months ended · For the six months ended | ||||||||||||
| · · June 30, · · June 30, · | ||||||||||||
| · 2024 · 2023 · 2024 · 2023 · | ||||||||||||
| U.S. corporate income tax rate | | 21% | | 21% | | 21% | | 21% | ||||
| Dividends received deduction | | (4) | | (4) | | | (4) | | (16) | | ||
| Tax credits | | (4) | | | (4) | | | (3) | | | (12) | |
| Impact of equity method presentation | | (1) | | | (2) | | | (1) | | | (6) | |
| Interest exclusion from taxable income | | (1) | | | (1) | | | (1) | | | (5) | |
| Employee compensation | | — | | | — | | | — | | | (3) | |
| Local country permanent tax adjustments | | — | | | — | | | — | | | (2) | |
| Foreign currency inflation | | — | | | (1) | | | — | | | (2) | |
| State income taxes | | 4 | | | 1 | | | 2 | | | 2 | |
| Low income housing tax credit amortization | | 2 | | | 2 | | | 2 | | | 8 | |
| Global Intangible Low-Taxed Income | | — | | | — | | | — | | | 5 | |
| Valuation allowance | | 3 | | | 1 | | | 1 | | | 1 | |
| Foreign country statutory rate differential | | — | | | — | | | — | | | 1 | |
| Effective income tax rate | | 20% | | 13% | | 17% | | (8)% | ||||
Pillar Two Model Rules
We are currently monitoring global enactments of the Pillar Two model rules proposed by the Organisation for Economic Co-operation and Development, which brings forward a 15% global minimum tax. Generally, a company is required to consider the impact of new tax law on realizability of its deferred tax assets (“DTAs”), including determination of whether a change to its valuation allowance amounts is necessary. We made an accounting policy election to disregard the Pillar Two model rules when evaluating DTAs and rather recognize a current period tax expense when incurred.
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