XML 59 R29.htm IDEA: XBRL DOCUMENT v3.25.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Taxes [Line Items]  
Income Taxes Income Taxes
CMS Energy and its subsidiaries file a consolidated U.S. federal income tax return as well as a Michigan Corporate Income Tax return for the unitary business group and various other state unitary group combined income tax returns. Income taxes are allocated based on each company’s separate taxable income in accordance with the CMS Energy tax sharing agreement.
Presented in the following table is the difference between actual income tax expense on continuing operations and income tax expense computed by applying the statutory U.S. federal income tax rate:
In Millions, Except Tax Rate
Years Ended December 31202420232022
CMS Energy, including Consumers
Income from continuing operations before income taxes$1,123 $954 $902 
Income tax expense at statutory rate236 200 189 
Increase (decrease) in income taxes from:
State and local income taxes, net of federal effect1
60 31 51 
Renewable energy tax credits(72)(58)(51)
TCJA excess deferred taxes
(43)(40)(65)
Deferred tax adjustment2
(16)— — 
Taxes attributable to noncontrolling interests12 17 5 
Accelerated flow-through of regulatory tax benefits3
— — (39)
Other, net(1)(3)3 
Income tax expense$176 $147 $93 
Effective tax rate15.7 %15.4 %10.3 %
Consumers
Income from continuing operations before income taxes$1,209 $1,028 $1,085 
Income tax expense at statutory rate254 216 228 
Increase (decrease) in income taxes from:
State and local income taxes, net of federal effect1
59 36 59 
Renewable energy tax credits(54)(46)(46)
TCJA excess deferred taxes
(43)(40)(65)
Deferred tax adjustment2
(16)— — 
Accelerated flow-through of regulatory tax benefits3
— — (39)
Other, net— (5)3 
Income tax expense$200 $161 $140 
Effective tax rate16.5 %15.7 %12.9 %
1CMS Energy initiated a plan to divest immaterial business activities in a non‑Michigan jurisdiction and will no longer have a taxable presence within that jurisdiction. As a result of these actions, during 2023, CMS Energy reversed a $13 million non‑Michigan reserve, all of which was recognized at Consumers.
2During 2024, Consumers recognized a $16 million tax benefit resulting from the expiration of the statute of limitations associated with audit points for the 2018 and 2019 tax years.
3In 2020, the MPSC authorized Consumers to accelerate the amortization of income tax benefits associated with the cost to remove gas plant assets. These tax benefits were fully amortized in 2022.
Renewable Energy Tax Credits: Under the Inflation Reduction Act of 2022, renewable energy tax credits produced after 2022 are eligible to be transferred to third parties. These sales are accounted for under ASC 740 with the discount from the sale of the tax credits included as a component of income tax expense. Renewable energy tax credits that have been generated and sold are presented as accounts receivable on CMS Energy’s and Consumers’ consolidated balance sheets until proceeds from the sale are received. Proceeds from the sale of tax credits are presented as operating activities on their consolidated statements of cash flows, consistent with the presentation of cash taxes paid.
During 2024, CMS Energy sold renewable energy tax credits generated in 2023 and received proceeds of $37 million, all of which was recognized at Consumers. CMS Energy also sold renewable energy tax credits generated in 2024, receiving proceeds of $59 million in 2024, of which $39 million was recognized at Consumers. CMS Energy will receive an additional $13 million in 2025, all of which will be recognized at Consumers.
Presented in the following table are the significant components of income tax expense on continuing operations:
In Millions
Years Ended December 31202420232022
CMS Energy, including Consumers
Current income taxes
Federal$34 $5 $6 
State and local— 1 — 
$34 $6 $6 
Deferred income taxes
Federal70 107 4 
State and local76 38 65 
$146 $145 $69 
Deferred income tax credit(4)(4)18 
Tax expense$176 $147 $93 
Consumers
Current income taxes
Federal$78 $3 $(2)
State and local7 2 8 
$85 $5 $6 
Deferred income taxes
Federal51 117 50 
State and local68 43 66 
$119 $160 $116 
Deferred income tax credit(4)(4)18 
Tax expense$200 $161 $140 
Presented in the following table are the principal components of deferred income tax assets (liabilities) recognized:
In Millions
December 3120242023
CMS Energy, including Consumers
Deferred income tax assets
Tax loss and credit carryforwards$258 $428 
Net regulatory tax liability307 305 
Reserves and accruals27 28 
Total deferred income tax assets$592 $761 
Valuation allowance(1)(2)
Total deferred income tax assets, net of valuation allowance$591 $759 
Deferred income tax liabilities
Plant, property, and equipment$(2,682)$(2,520)
Employee benefits(507)(473)
Gas inventory(38)(66)
Securitized costs(167)(194)
Other(122)(121)
Total deferred income tax liabilities$(3,516)$(3,374)
Total net deferred income tax liabilities$(2,925)$(2,615)
Consumers
Deferred income tax assets
Net regulatory tax liability$307 $305 
Tax loss and credit carryforwards37 175 
Reserves and accruals24 27 
Total deferred income tax assets$368 $507 
Deferred income tax liabilities
Plant, property, and equipment$(2,658)$(2,498)
Employee benefits(489)(459)
Gas inventory(38)(66)
Securitized costs(167)(194)
Other(69)(79)
Total deferred income tax liabilities$(3,421)$(3,296)
Total net deferred income tax liabilities$(3,053)$(2,789)
Deferred tax assets and liabilities are recognized for the estimated future tax effect of temporary differences between the tax basis of assets or liabilities and the reported amounts on CMS Energy’s and Consumers’ consolidated financial statements.
Presented in the following table are the tax loss and credit carryforwards at December 31, 2024:
In Millions
Tax AttributeExpiration
CMS Energy, including Consumers
Michigan net operating loss carryforwards$38 2030 – 2033
Arkansas net operating loss carryforwards2 2033 - 2034
Local net operating loss carryforwards2 2025 – 2040
General business credits1
216 2038 – 2044
Total tax attributes$258 
Consumers
Michigan net operating loss carryforwards$29 2030 – 2033
General business credits1
8 2038 – 2044
Total tax attributes$37 
1General business credits comprise research and development tax credits and renewable energy tax credits that are not expected to be transferred to third parties.
CMS Energy has provided a valuation allowance of $1 million for the local tax loss carryforward. CMS Energy and Consumers expect to utilize fully their tax loss and credit carryforwards for which no valuation allowance has been provided. It is reasonably possible that further adjustments will be made to the valuation allowances within one year.
Presented in the following table is a reconciliation of the beginning and ending amount of uncertain tax benefits:
In Millions
Years Ended December 31202420232022
CMS Energy, including Consumers
Balance at beginning of period$26 $28 $27 
Additions for current-year tax positions1 1 1 
Additions for prior-year tax positions2 — 1 
Reductions for prior-year tax positions— — (1)
Reductions for lapse of statute of limitations(5)(3)— 
Balance at end of period$24 $26 $28 
Consumers
Balance at beginning of period$36 $36 $34 
Additions for current-year tax positions6 1 3 
Additions for prior-year tax positions1 2 1 
Reductions for prior-year tax positions— — (2)
Reductions for lapse of statute of limitations(11)(3)— 
Balance at end of period$32 $36 $36 
If recognized, all of these uncertain tax benefits would affect CMS Energy’s and Consumers’ annual effective tax rates in future years. One uncertain tax benefit relates to the methodology of state apportionment for Consumers’ electricity sales to MISO. The Michigan Tax Tribunal heard oral arguments on this methodology during 2022. A final conclusion is not anticipated in the next 12 months.
CMS Energy and Consumers recognize accrued interest and penalties, where applicable, as part of income tax expense. CMS Energy, including Consumers, recognized immaterial interest and penalties for each of the years ended December 31, 2024, 2023, and 2022.
The amount of income taxes paid is subject to ongoing audits by federal, state, local, and foreign tax authorities, which can result in proposed assessments. CMS Energy’s federal income tax returns for 2021 and subsequent years remain subject to examination by the IRS. CMS Energy’s Michigan Corporate Income Tax returns for 2013‑2016 and 2020 and subsequent years remain subject to examination by the State of Michigan. CMS Energy’s and Consumers’ estimate of the potential outcome for any uncertain tax issue is highly judgmental. CMS Energy and Consumers believe that their accrued tax liabilities at December 31, 2024 were adequate for all years.
Consumers Energy Company  
Income Taxes [Line Items]  
Income Taxes Income Taxes
CMS Energy and its subsidiaries file a consolidated U.S. federal income tax return as well as a Michigan Corporate Income Tax return for the unitary business group and various other state unitary group combined income tax returns. Income taxes are allocated based on each company’s separate taxable income in accordance with the CMS Energy tax sharing agreement.
Presented in the following table is the difference between actual income tax expense on continuing operations and income tax expense computed by applying the statutory U.S. federal income tax rate:
In Millions, Except Tax Rate
Years Ended December 31202420232022
CMS Energy, including Consumers
Income from continuing operations before income taxes$1,123 $954 $902 
Income tax expense at statutory rate236 200 189 
Increase (decrease) in income taxes from:
State and local income taxes, net of federal effect1
60 31 51 
Renewable energy tax credits(72)(58)(51)
TCJA excess deferred taxes
(43)(40)(65)
Deferred tax adjustment2
(16)— — 
Taxes attributable to noncontrolling interests12 17 5 
Accelerated flow-through of regulatory tax benefits3
— — (39)
Other, net(1)(3)3 
Income tax expense$176 $147 $93 
Effective tax rate15.7 %15.4 %10.3 %
Consumers
Income from continuing operations before income taxes$1,209 $1,028 $1,085 
Income tax expense at statutory rate254 216 228 
Increase (decrease) in income taxes from:
State and local income taxes, net of federal effect1
59 36 59 
Renewable energy tax credits(54)(46)(46)
TCJA excess deferred taxes
(43)(40)(65)
Deferred tax adjustment2
(16)— — 
Accelerated flow-through of regulatory tax benefits3
— — (39)
Other, net— (5)3 
Income tax expense$200 $161 $140 
Effective tax rate16.5 %15.7 %12.9 %
1CMS Energy initiated a plan to divest immaterial business activities in a non‑Michigan jurisdiction and will no longer have a taxable presence within that jurisdiction. As a result of these actions, during 2023, CMS Energy reversed a $13 million non‑Michigan reserve, all of which was recognized at Consumers.
2During 2024, Consumers recognized a $16 million tax benefit resulting from the expiration of the statute of limitations associated with audit points for the 2018 and 2019 tax years.
3In 2020, the MPSC authorized Consumers to accelerate the amortization of income tax benefits associated with the cost to remove gas plant assets. These tax benefits were fully amortized in 2022.
Renewable Energy Tax Credits: Under the Inflation Reduction Act of 2022, renewable energy tax credits produced after 2022 are eligible to be transferred to third parties. These sales are accounted for under ASC 740 with the discount from the sale of the tax credits included as a component of income tax expense. Renewable energy tax credits that have been generated and sold are presented as accounts receivable on CMS Energy’s and Consumers’ consolidated balance sheets until proceeds from the sale are received. Proceeds from the sale of tax credits are presented as operating activities on their consolidated statements of cash flows, consistent with the presentation of cash taxes paid.
During 2024, CMS Energy sold renewable energy tax credits generated in 2023 and received proceeds of $37 million, all of which was recognized at Consumers. CMS Energy also sold renewable energy tax credits generated in 2024, receiving proceeds of $59 million in 2024, of which $39 million was recognized at Consumers. CMS Energy will receive an additional $13 million in 2025, all of which will be recognized at Consumers.
Presented in the following table are the significant components of income tax expense on continuing operations:
In Millions
Years Ended December 31202420232022
CMS Energy, including Consumers
Current income taxes
Federal$34 $5 $6 
State and local— 1 — 
$34 $6 $6 
Deferred income taxes
Federal70 107 4 
State and local76 38 65 
$146 $145 $69 
Deferred income tax credit(4)(4)18 
Tax expense$176 $147 $93 
Consumers
Current income taxes
Federal$78 $3 $(2)
State and local7 2 8 
$85 $5 $6 
Deferred income taxes
Federal51 117 50 
State and local68 43 66 
$119 $160 $116 
Deferred income tax credit(4)(4)18 
Tax expense$200 $161 $140 
Presented in the following table are the principal components of deferred income tax assets (liabilities) recognized:
In Millions
December 3120242023
CMS Energy, including Consumers
Deferred income tax assets
Tax loss and credit carryforwards$258 $428 
Net regulatory tax liability307 305 
Reserves and accruals27 28 
Total deferred income tax assets$592 $761 
Valuation allowance(1)(2)
Total deferred income tax assets, net of valuation allowance$591 $759 
Deferred income tax liabilities
Plant, property, and equipment$(2,682)$(2,520)
Employee benefits(507)(473)
Gas inventory(38)(66)
Securitized costs(167)(194)
Other(122)(121)
Total deferred income tax liabilities$(3,516)$(3,374)
Total net deferred income tax liabilities$(2,925)$(2,615)
Consumers
Deferred income tax assets
Net regulatory tax liability$307 $305 
Tax loss and credit carryforwards37 175 
Reserves and accruals24 27 
Total deferred income tax assets$368 $507 
Deferred income tax liabilities
Plant, property, and equipment$(2,658)$(2,498)
Employee benefits(489)(459)
Gas inventory(38)(66)
Securitized costs(167)(194)
Other(69)(79)
Total deferred income tax liabilities$(3,421)$(3,296)
Total net deferred income tax liabilities$(3,053)$(2,789)
Deferred tax assets and liabilities are recognized for the estimated future tax effect of temporary differences between the tax basis of assets or liabilities and the reported amounts on CMS Energy’s and Consumers’ consolidated financial statements.
Presented in the following table are the tax loss and credit carryforwards at December 31, 2024:
In Millions
Tax AttributeExpiration
CMS Energy, including Consumers
Michigan net operating loss carryforwards$38 2030 – 2033
Arkansas net operating loss carryforwards2 2033 - 2034
Local net operating loss carryforwards2 2025 – 2040
General business credits1
216 2038 – 2044
Total tax attributes$258 
Consumers
Michigan net operating loss carryforwards$29 2030 – 2033
General business credits1
8 2038 – 2044
Total tax attributes$37 
1General business credits comprise research and development tax credits and renewable energy tax credits that are not expected to be transferred to third parties.
CMS Energy has provided a valuation allowance of $1 million for the local tax loss carryforward. CMS Energy and Consumers expect to utilize fully their tax loss and credit carryforwards for which no valuation allowance has been provided. It is reasonably possible that further adjustments will be made to the valuation allowances within one year.
Presented in the following table is a reconciliation of the beginning and ending amount of uncertain tax benefits:
In Millions
Years Ended December 31202420232022
CMS Energy, including Consumers
Balance at beginning of period$26 $28 $27 
Additions for current-year tax positions1 1 1 
Additions for prior-year tax positions2 — 1 
Reductions for prior-year tax positions— — (1)
Reductions for lapse of statute of limitations(5)(3)— 
Balance at end of period$24 $26 $28 
Consumers
Balance at beginning of period$36 $36 $34 
Additions for current-year tax positions6 1 3 
Additions for prior-year tax positions1 2 1 
Reductions for prior-year tax positions— — (2)
Reductions for lapse of statute of limitations(11)(3)— 
Balance at end of period$32 $36 $36 
If recognized, all of these uncertain tax benefits would affect CMS Energy’s and Consumers’ annual effective tax rates in future years. One uncertain tax benefit relates to the methodology of state apportionment for Consumers’ electricity sales to MISO. The Michigan Tax Tribunal heard oral arguments on this methodology during 2022. A final conclusion is not anticipated in the next 12 months.
CMS Energy and Consumers recognize accrued interest and penalties, where applicable, as part of income tax expense. CMS Energy, including Consumers, recognized immaterial interest and penalties for each of the years ended December 31, 2024, 2023, and 2022.
The amount of income taxes paid is subject to ongoing audits by federal, state, local, and foreign tax authorities, which can result in proposed assessments. CMS Energy’s federal income tax returns for 2021 and subsequent years remain subject to examination by the IRS. CMS Energy’s Michigan Corporate Income Tax returns for 2013‑2016 and 2020 and subsequent years remain subject to examination by the State of Michigan. CMS Energy’s and Consumers’ estimate of the potential outcome for any uncertain tax issue is highly judgmental. CMS Energy and Consumers believe that their accrued tax liabilities at December 31, 2024 were adequate for all years.