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Income Taxes | 9 Months Ended
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Sep. 30, 2025
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES See Note 10 to the financial statements in Item 8 of the Form 10-K for additional tax information. Current and Deferred Income Taxes Alabama Power, Georgia Power, and Southern Power have entered into agreements with non-affiliated parties to transfer ITCs and PTCs at a discount to the generated credit value in 2024, 2025, and 2026. During the first nine months of 2025, Alabama Power, Georgia Power, and Southern Power received cash of $80 million, $64 million, and $19 million, respectively, from credits transferred. The discount is recorded as a reduction in tax credits recognized in the financial statements and does not have a material impact on results of operations. The Southern Company system continues to explore the ability to efficiently monetize its tax credits through third-party transfer agreements. During the first nine months of 2025, pursuant to certain joint ownership agreements, Georgia Power paid $121 million to the other Vogtle Owners for advanced nuclear PTCs for Plant Vogtle Units 3 and 4. The gain was recognized in 2025 as an income tax benefit and was immaterial. Tax Credit and Net Operating Loss Carryforwards Southern Company's federal PTC and ITC carryforwards are expected to be fully utilized by 2031. The utilization of each Registrant's estimated federal and state tax attributes and related valuation allowances could be impacted by numerous factors, including the acquisition of additional renewable energy and battery energy storage projects, changes in taxable income projections, and potential income tax rate changes. See Notes (B) and (K) under "Georgia Power" and "Southern Power," respectively, herein for information regarding current renewable energy and battery energy storage projects. Effective Tax Rate Southern Company's effective tax rate is typically lower than the statutory rate due to employee stock plans' dividend deduction, non-taxable AFUDC equity at the traditional electric operating companies, flowback of excess deferred income taxes at the regulated utilities, and federal income tax benefits from ITCs and PTCs. Details of significant changes in the effective tax rate for the applicable Registrants are provided herein. Southern Company Southern Company's effective tax rate was 20.3% for the nine months ended September 30, 2025 compared to 19.0% for the corresponding period in 2024. The effective tax rate increase was primarily due to charges to a valuation allowance on certain state tax credit carryforwards at Georgia Power and the recognition of certain state tax positions from amended returns in the second quarter 2024 at Georgia Power, partially offset by a net increase in the flowback of excess deferred income taxes at the regulated utilities and an increase in the generation of advanced nuclear PTCs at Georgia Power. Alabama Power Alabama Power's effective tax rate was 23.0% for the nine months ended September 30, 2025 compared to 21.2% for the corresponding period in 2024. The effective tax rate increase was primarily due to a decrease in the flowback of certain excess deferred income taxes. Georgia Power Georgia Power's effective tax rate was 20.0% for the nine months ended September 30, 2025 compared to 18.7% for the corresponding period in 2024. The effective tax rate increase was primarily due to charges to a valuation allowance on certain state tax credit carryforwards and the recognition of certain state tax positions from amended returns in the second quarter 2024, partially offset by increases in the flowback of excess state deferred income taxes and in the generation of advanced nuclear PTCs. Mississippi Power Mississippi Power's effective tax rate was 22.5% for the nine months ended September 30, 2025 compared to 20.0% for the corresponding period in 2024. The effective tax rate increase was primarily due to a decrease in the flowback of certain excess deferred income taxes. Southern Power Southern Power's effective tax rate was 6.0% for the nine months ended September 30, 2025 compared to 14.4% for the corresponding period in 2024. The effective tax rate decrease was primarily due to a change in pre-tax earnings attributable to Southern Power, including the impact of accelerated depreciation related to wind repowering projects and changes in tax rates resulting from tax legislation enacted by the State of Georgia in the second quarters of 2024 and 2025. See Note (K) under "Southern Power – Wind Repowering Projects" herein for additional information. Southern Company Gas Southern Company Gas' effective tax rate was 23.5% for the nine months ended September 30, 2025 compared to 24.9% for the corresponding period in 2024. The effective tax rate decrease was primarily due to an increase in the flowback of excess state deferred income taxes. Unrecognized Tax Benefits Southern Company's, Alabama Power's, and Georgia Power's unrecognized tax positions balances at September 30, 2025 were $380 million, $144 million, and $188 million, respectively. At December 31, 2024, Southern Company's and Georgia Power's unrecognized tax positions balances were $82 million and $34 million, respectively, and Alabama Power had no unrecognized tax positions. The increases from prior periods are related to Alabama Power's and Georgia Power's ability to meet prevailing wage requirements related to existing zero-emission nuclear power PTCs and will not impact Southern Company's, Alabama Power's, and Georgia Power's effective tax rates if recognized. The ultimate outcome of this unrecognized tax benefit, which is expected to be resolved within the next 12 months, is dependent on acceptance by the IRS and cannot be determined at this time.

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