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Income Taxes | 9 Months Ended
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Sep. 30, 2025
Income Tax Disclosure [Abstract] |
Income Taxes |
NOTE 11 | Income Taxes
The components of income tax expense were:
| Three Months Ended September 30 | Nine Months Ended September 30
(Dollars in Millions) | 2025 | 2024 | 2025 | 2024
Federal |  |  |  |
Current | $ | 332 |  | $ | 144 |  | $ | 588 |  | $ | 645 |
Deferred | 88 |  | 79 |  | 441 |  | 261 |
Federal income tax | 420 |  | 223 |  | 1,029 |  | 906 |
State |  |  |  |
Current | 100 |  | 105 |  | 287 |  | 214 |
Deferred | 4 |  | 22 |  | 123 |  | 22 |
State income tax | 104 |  | 127 |  | 410 |  | 236 |
Total income tax provision | $ | 524 |  | $ | 350 |  | $ | 1,439 |  | $ | 1,142 |
A reconciliation of expected income tax expense at the federal statutory rate of 21 percent to the Company’s applicable income tax expense follows:
| Three Months Ended September 30 | Nine Months Ended September 30
(Dollars in Millions) | 2025 | 2024 | 2025 | 2024
Tax at statutory rate | $ | 532 |  | $ | 435 |  | $ | 1,467 |  | $ | 1,218 |
State income tax, at statutory rates, net of federal tax benefit | 119 |  | 106 |  | 330 |  | 289 |
Tax effect of |  |  |  |
Tax credits and benefits, net of related expenses | (115) |  | (140) |  | (381) |  | (284) |
Revaluation of tax related assets and liabilities(a) | — |  | — |  | 72 |  | — |
Exam resolutions | (1) |  | (1) |  | (1) |  | (98) |
Tax-exempt income | (39) |  | (38) |  | (112) |  | (105) |
Other items | 28 |  | (12) |  | 64 |  | 122 |
Applicable income taxes | $ | 524 |  | $ | 350 |  | $ | 1,439 |  | $ | 1,142 |
(a)California enacted legislation resulting in a decrease to the Company’s state effective tax rate, requiring the Company to revalue its state deferred tax assets and liabilities. As a result of this revaluation, the Company recorded an estimated net tax expense of $72 million in the second quarter of 2025. The Company’s income tax returns are subject to review and examination by federal, state, local and foreign government authorities. On an ongoing basis, numerous federal, state, local and foreign examinations are in progress and cover multiple tax years. As of September 30, 2025, federal tax examinations for all years ending through December 31, 2020 are completed and resolved. The Company’s tax returns for the years ended December 31, 2021 through December 31, 2022 are under examination by the Internal Revenue Service. The years open to examination by foreign, state and local government authorities vary by jurisdiction. The Company’s net deferred tax asset was $5.0 billion at September 30, 2025 and $6.3 billion at December 31, 2024.

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