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Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes
Note 12 — Income Taxes
Cleco
The following table presents a reconciliation of income tax expense (benefit) at the statutory rate and income tax expense (benefit) on income (loss) from continuing operations reported on Cleco’s Consolidated Statement of Income:
FOR THE YEAR ENDED DEC. 31,
(THOUSANDS, EXCEPT PERCENTAGES)2025
%
2024
%
2023
%
Income (loss) from continuing operations before income taxes$234,825 $78,957 $(94,942)
U.S federal statutory tax rate
$49,313 21.0 %$16,581 21.0 %$(19,938)21.0 %
State and local income taxes, net of federal tax effect
$10,541 4.5 %$20,999 26.6 %$(4,004)4.2 %
Nontaxable or nondeductible items
$1,147 0.5 %$748 0.9 %$192 (0.2)%
Other adjustments
Flowthrough of tax benefits
$(15,859)(6.7)%$(7,844)(9.9)%$(7,737)8.1 %
Amortization of excess deferred income taxes
$(5,359)(2.3)%$(15,977)(20.2)%$(33,518)35.3 %
Other
$(168)(0.1)%$(451)(0.6)%$(68)0.1 %
Effective tax rate
$39,615 16.9 %$14,056 17.8 %$(65,073)68.5 %
Information about current and deferred income tax expense from continuing operations is as follows:
FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)202520242023
Current federal income tax expense (benefit)
$11,145 $(46,955)$(45,429)
Deferred federal income tax expense (benefit)
31,230 42,380 (7,137)
Amortization of accumulated deferred investment tax credits
(104)(115)(127)
Total federal income tax expense (benefit)
$42,271 $(4,690)$(52,693)
Current state income tax (benefit) expense
(342)18,833 (9,787)
Deferred state income tax benefit
(2,314)(87)(2,593)
Total state income tax (benefit) expense
$(2,656)$18,746 $(12,380)
Total federal and state income tax expense (benefit)
$39,615 $14,056 $(65,073)
Items charged or credited directly to member’s equity
Federal deferred income tax
(1,807)646 (1,374)
State deferred income tax
(501)327 (531)
Total tax (benefit) expense from items charged directly to member’s equity
$(2,308)$973 $(1,905)
Total federal and state income tax expense (benefit)
$37,307 $15,029 $(66,978)

The following table presents federal and state income taxes paid, net of refunds.

FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)202520242023
Income taxes paid, net of refunds
Federal
$3,044 $2,714 $— 
State:
Louisiana
2,325 6,424 2,162 
Other
2 — — 
Total income taxes paid, net of refunds
$5,371 $9,138 $2,162 
The balance of accumulated deferred federal and state income tax assets and liabilities at December 31, 2025, and 2024 was comprised of the following:
AT DEC. 31,
(THOUSANDS)20252024
Deferred tax liabilities:
Depreciation and property basis differences$(674,802)$(663,454)
Fuel cost
(4,378)(2,161)
Other comprehensive income
(4,763)(6,127)
Regulated operations
(226,197)(207,915)
Merger fair value adjustments
(39,817)(41,583)
Other
(39,843)(15,276)
Total deferred tax liabilities (989,800)(936,516)
Deferred tax assets:
Depreciation and property basis differences
199 291 
Net operating loss carryforward
— 11,761 
NMTC
68,152 68,655 
Other comprehensive income
11,788 10,844 
Regulated operations
60,946 57,776 
Postretirement benefits
21,262 21,803 
Other
18,806 17,140 
Total deferred tax assets181,153 188,270 
Accumulated deferred federal and state income taxes, net
$(808,647)$(748,246)
Cleco Power
The following table presents a reconciliation of income tax expense at the statutory rate and income tax expense (benefit) on income reported on Cleco Power’s Consolidated Statement of Income:




 FOR THE YEAR ENDED DEC. 31,
(THOUSANDS, EXCEPT PERCENTAGES)2025
%
2024
%
2023
%
Income before income taxes
$277,678 $157,424 $132,715 
U.S federal statutory tax rate
$58,312 21.0 %$33,059 21.0 %$27,870 21.0 %
State and local income taxes, net of federal tax effect
$12,632 4.6 %$9,714 6.2 %$9,101 6.9 %
Nontaxable or nondeductible items
$76 — %$183 0.1 %$92 0.1 %
Other adjustments
Flowthrough of tax benefits
$(15,859)(5.7)%$(7,844)(5.0)%$(7,737)(5.8)%
Amortization of excess deferred income taxes
$(5,359)(1.9)%$(15,977)(10.1)%$(33,518)(25.3)%
Other
$(225)(0.1)%$(629)(0.4)%$(242)(0.2)%
Effective tax rate
$49,577 17.9 %$18,506 11.8 %$(4,434)(3.3)%
Information about current and deferred income tax expense is as follows:

 FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)202520242023
Current federal income tax expense
$18,706 $4,189 $11,188 
Deferred federal income tax expense (benefit)
31,074 12,736 (20,029)
Amortization of accumulated deferred investment tax credits
(104)(114)(127)
Total federal income tax expense (benefit) $49,676 $16,811 $(8,968)
Current state income tax expense
2,115 2,052 5,617 
Deferred state income tax benefit
(2,214)(357)(1,083)
Total state income tax (benefit) expense
$(99)$1,695 $4,534 
Total federal and state income tax expense (benefit)$49,577 $18,506 $(4,434)
Items charged or credited directly to members’ equity
  
Federal deferred income tax
(739)67 (528)
State deferred income tax
(205)281 (208)
Total tax expense (benefit) from items charged directly to member’s equity
$(944)$348 $(736)
Total federal and state income tax expense (benefit) $48,633 $18,854 $(5,170)

Cleco Power paid $1.4 million in federal income taxes, net of refunds for 2025. Cleco Power made no payments in 2024 and 2023.
The balance of accumulated deferred federal and state income tax assets and liabilities at December 31, 2025, and 2024 was comprised of the following:
AT DEC. 31,
(THOUSANDS)20252024
Deferred tax liabilities:
Depreciation and property basis differences$(674,749)$(663,291)
Fuel cost
(4,378)(2,161)
Regulated operations
(226,197)(207,915)
Other
(25,349)(3,389)
Total deferred tax liabilities (930,673)(876,756)
Deferred tax assets:
Depreciation and property basis differences
199 291 
Net operating loss carryforward
— 11,761 
Other comprehensive income
3,932 2,988 
Regulated operations
60,946 57,776 
Postretirement benefits
10,067 10,137 
Other
5,805 5,787 
Total deferred tax assets80,949 88,740 
Accumulated deferred federal and state income taxes, net
$(849,724)$(788,016)

Tax Rate Changes
On December 4, 2024, the Louisiana state corporate income tax rate decreased from 7.5% to 5.5%, effective for the income tax periods beginning on or after January 1, 2025. In accordance with accounting guidance, Cleco and Cleco Power recorded the impact of the rate change on its consolidated financial statements at December 31, 2024, by decreasing Accumulated deferred federal and state income taxes, net by $66.5 million and increasing Regulatory liabilities - deferred taxes, net by $64.9 million. The impact to income tax
expense was $1.6 million. For more information, see Note 6 “Regulatory Assets and Liabilities — Deferred Taxes, Net.”

Valuation Allowance
Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. At December 31, 2025, and 2024, Cleco had a deferred tax asset resulting from a NMTC carryforward of $68.2 million and $68.7 million, respectively. If the NMTC carryforward is not utilized, it will begin to expire in 2030. Management considers it more likely than not that the deferred tax asset related to the NMTC carryforward will be realized; therefore, no valuation allowance has been recorded for Cleco and Cleco Power.
Quarterly, management monitors and evaluates the realizability of deferred tax assets, and adjustments are recorded as appropriate in future periods. In evaluating the need for a valuation allowance, management considers various factors, including the expected level of future taxable income, available tax planning strategies, and reversals of existing taxable temporary differences. If such estimates and related assumptions change in the future, Cleco and Cleco Power may be required to record a valuation allowance against its deferred tax assets, resulting in additional income tax expense in Cleco’s and Cleco Power’s Consolidated Statements of Income.

Net Operating Losses
For the 2024 tax year, Cleco and Cleco Power had a federal net operating loss of approximately $39.4 million and a state net operating loss of approximately $81.8 million. For the 2025 tax year, Cleco and Cleco Power expect to utilize the remaining federal and state net operating losses.

Uncertain Tax Positions
Cleco classifies all interest related to uncertain tax positions as a component of interest payable and interest expense. At December 31, 2025, and 2024, Cleco and Cleco Power had no interest payable related to uncertain tax positions. For the years ended December 31, 2025, 2024, and 2023, Cleco and Cleco Power had no interest expense related to uncertain tax positions. At December 31, 2025, and 2024, Cleco and Cleco Power had no liability for unrecognized tax positions.

Income Tax Audits
Cleco Group participates in the IRS’s Compliance Assurance Process program in which tax positions are examined and agreed upon prior to filing the federal tax return. The Compliance Assurance Process program allows the IRS to establish a low risk of non-compliance, and at its discretion, may reduce the level of its review based on complexity and the number of issues found. Cleco Group's application has been accepted into the Compliance Assurance Process program for the 2022-2024 tax years and the statute of limitations remains open for those tax years.
The state income tax years 2022, 2023, and 2024 remain subject to examination by the Louisiana Department of Revenue.
Cleco records income tax penalties in Other Expense on its Consolidated Statements of Income. For the years ended December 31, 2025, 2024, and 2023, no penalties were recognized.