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INCOME TAXES
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES.
Income before income taxes for each of the past three years was earned almost entirely in the United States.

INCOME TAX PROVISION.

The provision for income taxes consists of:
(in millions)202520242023
Current income taxes
U.S. federal$434.5 $634.7 $554.0 
State and local91.2 112.4 68.1 
Foreign44.7 24.7 23.9 
Deferred income taxes (benefits)96.8 (88.0)8.6 
Total$667.2 $683.8 $654.6 
In 2025 and 2023, stock-based compensation plans activity increased income tax expense by $3.2 million and $3.4 million, respectively. In 2024, stock-based compensation plans activity decreased income tax expense by $4.5 million. These income tax impacts were recognized in the income tax provision.

The following table reconciles the statutory federal income tax rate to our effective income tax rate. 
202520242023
AmountPercentAmountPercentAmountPercent
Statutory U.S. federal income tax rate$603.8 21.0 %$592.1 21.0 %$523.0 21.0 %
U.S. federal
Net income (loss) attributable to redeemable non-controlling interests(1)
(25.5)(0.9)(7.5)(0.3)(9.9)(0.4)
Net excess tax benefits from stock-based compensation plans activity1.4 — (4.0)(0.1)2.8 0.1 
Other(0.7)— (0.5)(0.1)(7.8)(0.3)
State and local income taxes, net of federal effect58.2 2.1 79.9 2.9 55.8 2.3 
Foreign tax effects
United Kingdom: changes in valuation allowances13.1 0.4 10.8 0.4 81.1 3.3 
Other16.9 0.6 13.0 0.5 9.6 0.3 
Effective income tax$667.2 23.2 %$683.8 24.3 %$654.6 26.3 %
(1) 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.

In each of 2023, 2024, and 2025, more than 50% of our state and local tax expense was attributable to a concentrated group of jurisdictions. For 2023 and 2025, these jurisdictions were Maryland, California, New York City, and New Jersey, and for 2024 they were Maryland, California, New York City, and New York State.

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)202520242023
Property, equipment and software$149.8 $(60.3)$(43.2)
Accrued, deferred, and long-term incentive compensation(20.0)(14.2)(28.6)
Operating lease assets33.9 (1.7)(6.3)
Operating lease liabilities(41.7)5.0 3.8 
Acquisition-related liabilities(13.5)(9.8)0.6 
Acquired investments(5.3)(27.9)(19.5)
Unrealized gains (losses) recognized in non-operating income16.6 16.8 43.8 
Net operating losses(15.8)(11.2)(31.5)
Change in valuation allowances11.2 16.1 86.4 
Other(18.4)(0.8)3.1 
Total net deferred income taxes (benefits)$96.8 $(88.0)$8.6 

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)20252024
Deferred tax assets
Accrued, deferred, and long-term incentive compensation$337.7 $317.7 
Operating lease liability81.5 39.8 
Acquired investments71.7 66.4 
Net operating loss carry-forwards64.8 53.7 
Property, equipment and software— 90.9 
Other27.0 12.9 
Total deferred tax assets582.7 581.4 
Valuation allowances(130.1)(118.9)
Total deferred tax assets, net of valuation allowances452.6 462.5 
Deferred tax liabilities
Operating lease assets(75.0)(41.1)
Unrealized gains (losses) recognized in non-operating income(66.6)(50.0)
Acquisition-related liabilities(64.0)(77.5)
Property, equipment and software(58.9)— 
Other— (15.9)
Total deferred tax liabilities(264.5)(184.5)
Net deferred tax assets$188.1 $278.0 
We had operating loss carryforwards before tax of $211.2 million at December 31, 2025 and $220.0 million at December 31, 2024. The decrease in operating loss carryforwards from 2024 is primarily related to operating income generated from our Hong Kong 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 $130.1 million at December 31, 2025 and $118.9 million at December 31, 2024. The increase of $11.2 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 $1,138 million at December 31, 2025. 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.

The following table summarizes the net income taxes paid:

(in millions)202520242023
U.S. federal taxes$469.8 $610.5 $529.4 
All other jurisdictions125.6 112.7 102.6 
Total taxes paid$595.4 $723.2 $632.0 

Other assets include tax refund receivables of $50.2 million at December 31, 2025, and $52.4 million at December 31, 2024.


UNRECOGNIZED TAX BENEFITS.

The following table summarizes the changes in our unrecognized tax benefits. 
(in millions)202520242023
Balance at beginning of year$43.0 $42.7 $35.4 
Changes in tax positions related to
Current year2.5 4.2 7.8 
Prior years(18.1)(2.9)0.5 
Expired statute of limitations(1.3)(1.0)(1.0)
Balance at end of year$26.1 $43.0 $42.7 

The decrease of unrecognized tax benefits related to prior years is due to the settlements of certain state tax benefits. If recognized, these unrecognized tax benefits would affect our effective tax rate; however, we do not expect that unrecognized tax benefits for tax positions taken with respect to 2025 and prior years will significantly change in 2026. As of January 2026, 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 $5.6 million at December 31, 2025, and $8.6 million at December 31, 2024, 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.