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Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The following is a reconciliation of income taxes at the statutory rate of 21% to the provision for income taxes as shown in AFG’s Statement of Earnings (dollars in millions):

202520242023
Amount% of EBTAmount% of EBTAmount% of EBT
Earnings before income taxes (“EBT”)
$1,073 $1,124 $1,073 
Income taxes at statutory rate$225 21%$236 21%$225 21%
Effect of:
State and local income taxes, net of federal income tax effect (*)
11 1%9 1%8 1%
Foreign tax effects(1)—%— —%— —%
Changes in tax laws or rates enacted in the current period— —%— —%— —%
Cross-border tax laws
(1)—%2 —%(3)—%
Income tax credits
(3)—%(2)—%(3)—%
Changes in valuation allowance(5)—%(2)—%(2)—%
Impact of nontaxable or nondeductible items:
Tax preference investments
(6)—%(6)(1%)(7)(1%)
Other5 —%1 —%2 —%
Changes in unrecognized income tax benefits
3 —%(1)—%— —%
Other adjustments3 —%— —%1 —%
Provision for income taxes as shown in the statement of earnings
$231 22%$237 21%$221 21%
(*)State taxes in California and Florida represent the majority (greater than 50%) of the state and local net tax effect in 2025. State taxes in Florida and Illinois represent the majority of the state and local net tax effect in both 2024 and 2023.

In 2025, AFG recorded $7 million in net tax expense related to a pending state income tax examination regarding the sale of a subsidiary in a prior year. In 2024, AFG recorded $4 million in net tax expense related to a pending IRS settlement regarding the sale of a different subsidiary in a prior year.

The One Big Beautiful Bill Act (enacted on July 4, 2025), among other things, extends many of the federal tax provisions of the 2017 Tax Cuts and Jobs Act and contains provisions that accelerate the timing of certain tax deductions with an offsetting impact to deferred taxes and no impact on total income tax expense. Management does not expect the tax provisions of the bill to be material to AFG’s results of operations in future periods.

The federal excise tax on stock repurchases (in excess of any issuances) is recorded as part of the cost of the repurchases directly in shareholders’ equity.

The Organisation for Economic Co-operation and Development (“OECD”) proposed a global minimum corporate tax rate of 15%, commonly referred to as Pillar Two. Due to AFG’s limited international operations, management does not believe Pillar Two will have a material impact on AFG’s results of operations.

AFG’s 2014 — 2018 and 2021 — 2025 tax years remain subject to examination by the IRS.
The table below highlights the portion of AFG’s earnings before income taxes that is subject to income taxes outside the United States (in millions):
202520242023
U.S. only
$1,031 $1,088 $1,041 
Foreign jurisdictions
42 36 32 
Total earnings before income taxes
$1,073 $1,124 $1,073 

The total income tax provision consists of (in millions):
202520242023
Current taxes:
U.S. federal
$168 $217 $169 
U.S. state and local
17 11 9 
Foreign5 1 6 
Total current tax expense
190 229 184 
Deferred taxes:
U.S. federal
41 8 37 
Total deferred tax expense
41 8 37 
Total income tax provision:
U.S. federal
209 225 206 
U.S. state and local
17 11 9 
Foreign
5 1 6 
Total income tax provision
$231 $237 $221 

For income tax purposes, AFG and its subsidiaries had the following carryforwards available at December 31, 2025 (in millions):
ExpiringAmount
Operating Loss – U.S.2041 - 2045$14 
Operating Loss – U.S.indefinite23 
Operating Loss – United Kingdomindefinite36 (*)
(*)£27 million
Deferred income tax assets and liabilities reflect temporary differences between the carrying amounts of assets and liabilities recognized for financial reporting purposes and the amounts recognized for tax purposes. The significant components of deferred tax assets and liabilities included in AFG’s Balance Sheet at December 31 were as follows (in millions):
20252024
Deferred tax assets:
Federal net operating loss carryforwards$8 $2 
Foreign underwriting losses9 10 
Insurance claims and reserves300 283 
Employee benefits117 114 
Lease liabilities
41 45 
Other, net29 20 
Total deferred tax assets before valuation allowance
504 474 
Valuation allowance against deferred tax assets(12)(11)
Total deferred tax assets492 463 
Deferred tax liabilities:
Investment securities(324)(233)
Deferred policy acquisition costs(76)(73)
Insurance claims and reserves transition liability— (4)
Lease right of use assets
(37)(42)
Real estate, property and equipment(42)(7)
Total deferred tax liabilities(479)(359)
Net deferred tax asset$13 $104 

AFG’s net deferred tax asset at December 31, 2025 and 2024 is included in other assets in AFG’s Balance Sheet. The decrease in AFG’s net deferred tax asset at December 31, 2025 compared to December 31, 2024 reflects lower net unrealized losses on fixed maturities and the increase in fair value of equity securities and carrying value of limited partnership investments still owned.

The likelihood of realizing deferred tax assets is reviewed periodically. Any adjustments required to the valuation allowance are made in the period during which developments requiring an adjustment become known.

At December 31, 2025, there are unrecognized tax benefits and related interest and penalties of $3 million (all related to penalties) that, if recognized, would impact the effective tax rate. At December 31, 2024, there were no unrecognized tax benefits or related interest and penalties. There were unrecognized tax benefits and related interest and penalties of less than $1 million at December 31, 2023.

Cash payments for income taxes, net of refunds, were as follows (in millions):
202520242023
U.S. federal
$150 $187 $188 
U.S. state and local
14 12 10 
Foreign
4 2 3 
Total cash payments for income taxes, net of refunds
$168 $201 $201