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INCOME TAXES
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES.
INCOME TAX PROVISION.

The provision for income taxes consists of:
(in millions)202420232022
Current income taxes
U.S. federal$634.7 $554.0 $574.7 
State and local112.4 68.1 115.4 
Foreign24.7 23.9 15.5 
Deferred income taxes (benefits)(88.0)8.6 (207.0)
Total$683.8 $654.6 $498.6 

Deferred income taxes (benefits) arise from temporary differences between taxable income for financial statement and income tax return purposes. The deferred income taxes (benefits) recognized as part of our provision for income taxes is related to:
(in millions)202420232022
Property, equipment and software$(60.3)$(43.2)$(64.1)
Accrued, deferred, and long-term incentive compensation(14.2)(28.6)11.8 
Operating lease assets(1.7)(6.3)24.8 
Operating lease liabilities5.0 3.8 (24.3)
Acquisition-related retention liability(12.9)(14.8)(13.6)
Contingent consideration liability3.1 15.4 32.4 
Acquired investments(27.9)(19.5)(73.0)
Unrealized gains (losses) recognized in non-operating income16.8 43.8 (114.6)
Net operating losses(11.2)(31.5)(11.0)
Change in valuation allowance16.1 86.4 16.4 
Other(0.8)3.1 8.2 
Total net deferred income taxes (benefits)$(88.0)$8.6 $(207.0)

The following table reconciles the statutory federal income tax rate to our effective income tax rate. 
202420232022
Statutory U.S. federal income tax rate21.0 %21.0 %21.0 %
State income taxes for current year, net of federal income tax benefits(1)
2.9 2.3 3.4 
Net income attributable to redeemable non-controlling interests(2)
(0.3)(0.5)1.3 
Net excess tax benefits from stock-based compensation plans activity(0.2)0.1 (0.4)
Valuation allowance0.2 3.4 — 
Other items0.7 — 0.3 
Effective income tax rate24.3 %26.3 %25.6 %
(1) State income tax benefits are reflected in the total benefits for net income attributable to redeemable non-controlling interests and stock-based compensation plans activity.
(2) Net income attributable to redeemable non-controlling interests represents the portion of earnings held in the firm's consolidated investment products, which are not taxable to the firm despite being included in pre-tax income.
DEFERRED TAX ASSETS (LIABILITIES).

The net deferred tax assets recognized in our consolidated balance sheets in other assets as of December 31 relate to the following: 
(in millions)20242023
Deferred tax assets
Accrued, deferred, and long-term incentive compensation$317.7 $303.5 
Property, equipment and software90.9 30.6 
Acquired investments66.4 40.3 
Net operating loss carry-forwards53.7 42.5 
Operating lease liability39.8 44.8 
Other12.9 16.0 
Total deferred tax assets581.4 477.7 
Valuation allowance(118.9)(102.8)
Total deferred tax assets, net of valuation allowance462.5 374.9 
Deferred tax liabilities
Contingent consideration liability(50.9)(47.8)
Unrealized gains (losses) recognized in non-operating income(50.0)(33.2)
Operating lease assets(41.1)(42.8)
Acquisition-related retention liability(26.6)(39.5)
Other(15.9)(17.8)
Total deferred tax liabilities(184.5)(181.1)
Net deferred tax assets$278.0 $193.8 

We had operating loss carryforwards before tax of $220.0 million at December 31, 2024 and $173.4 million at December 31, 2023. The increase in operating loss carryforwards from 2023 is primarily related to operating losses generated by our United Kingdom subsidiary. Almost all of the operating loss carryforwards are attributable to the United Kingdom and do not expire. However, the amount of annual profits that can be relieved by losses carried forward is limited to 50%, subject to an annual allowance of GBP 5 million per group.

We consider the need for valuation allowances against our deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. The valuation allowances total $118.9 million at December 31, 2024 and $102.8 million at December 31, 2023. The increase of $16.1 million in the valuation allowances was due to the uncertainty of generating sufficient taxable income in future periods in certain foreign jurisdictions. Any additional or reversal of valuation allowances in future periods will be dependent on the generation of sufficient taxable income. The future change in the valuation allowance could materially increase or decrease our income tax expenses in future periods.

We intend to repatriate earnings of T. Rowe Price foreign subsidiaries to the U.S. in an amount not to exceed these subsidiaries' previously taxed earnings and profits ("PTEP"), which are estimated to be approximately $989 million at December 31, 2024. These earnings as well as our pro rata share of the earnings of foreign corporations in which T. Rowe Price owns 10% or more were subject to the repatriation tax enacted with the U.S. tax reform and are treated as PTEP. As such, we did not record a deferred tax liability with respect to the U.S. federal or foreign withholding taxes as the PTEP should not be taxed in these jurisdictions.

OTHER DISCLOSURES.

Other assets include tax refund receivables of $52.4 million at December 31, 2024, and $81.0 million at December 31, 2023.
Cash outflows from operating activities include net income taxes paid of $723.2 million in 2024, $632.0 million in 2023, and $794.2 million in 2022.

In 2024, stock-based compensation plans activity decreased income tax expense by $4.5 million. In 2023 and 2022, stock-based compensation plans activity increased income tax expense by $3.4 million and decreased income tax expense by $7.1 million, respectively. These income tax impacts were recognized in the income tax provision.

UNRECOGNIZED TAX BENEFITS.

The following table summarizes the changes in our unrecognized tax benefits. 
(in millions)202420232022
Balance at beginning of year$42.7 $35.4 $29.3 
Changes in tax positions related to
Current year4.2 7.8 5.5 
Prior years(2.9)0.5 1.3 
Expired statute of limitations(1.0)(1.0)(0.7)
Balance at end of year$43.0 $42.7 $35.4 

If recognized, these tax benefits would affect our effective tax rate; however, we do not expect that unrecognized tax benefits for tax positions taken with respect to 2024 and prior years will significantly change in 2025. As of January 2025, the U.S. Internal Revenue Service ("IRS") has concluded examinations related to federal tax obligations through the year 2023.

A net interest payable related to our unrecognized tax benefits of $8.6 million at December 31, 2024, and $5.2 million at December 31, 2023, are recognized in our consolidated balance sheets. Our accounting policy with respect to interest and penalties arising from income tax settlements is to recognize them as part of our provision for income taxes. Interest recognized as part of our provision for income taxes was not material.