INCOME TAXES

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The disclosures in this note apply to all Registrants unless indicated otherwise.

Income Tax Expense (Benefit)

The details of the Registrants’ Income Tax Expense (Benefit) as reported are as follows:

Year Ended December 31, 2024	AEP		AEP Texas		AEPTCo		APCo		I&M		OPCo		PSO		SWEPCo
	(in millions)
Federal:
Current	$	(2.8)	$	22.1	$	75.1	$	79.9	$	16.6	$	41.5	$	(119.0)	$	(111.4)
Deferred	(57.9)		77.1		89.1		(17.8)		(118.8)		(2.7)		20.1		(86.1)
Total Federal	(60.7)		99.2		164.2		62.1		(102.2)		38.8		(98.9)		(197.5)
State and Local:
Current	(5.2)		2.9		5.6		12.6		7.0		3.1		(0.2)		1.8
Deferred	26.7		—		20.5		0.4		—		10.5		(0.5)		11.7
Total State and Local	21.5		2.9		26.1		13.0		7.0		13.6		(0.7)		13.5
Income Tax Expense (Benefit)	$	(39.2)	$	102.1	$	190.3	$	75.1	$	(95.2)	$	52.4	$	(99.6)	$	(184.0)

Year Ended December 31, 2023	AEP		AEP Texas		AEPTCo		APCo		I&M		OPCo		PSO		SWEPCo
	(in millions)
Federal:
Current	$	(116.7)	$	19.8	$	93.9	$	62.2	$	93.2	$	46.6	$	(60.8)	$	(88.1)
Deferred	115.9		63.5		52.3		(60.5)		(56.9)		2.8		2.9		59.9
Total Federal	(0.8)		83.3		146.2		1.7		36.3		49.4		(57.9)		(28.2)
State and Local:
Current	69.0		2.7		9.1		6.3		21.1		(0.3)		0.3		1.0
Deferred	(13.6)		(0.1)		(8.2)		6.2		1.2		5.2		4.0		(6.1)
Total State and Local	55.4		2.6		0.9		12.5		22.3		4.9		4.3		(5.1)
Income Tax Expense (Benefit)	$	54.6	$	85.9	$	147.1	$	14.2	$	58.6	$	54.3	$	(53.6)	$	(33.3)

Year Ended December 31, 2022	AEP		AEP Texas		AEPTCo		APCo		I&M		OPCo		PSO		SWEPCo
	(in millions)
Federal:
Current	$	113.1	$	29.0	$	98.0	$	(61.0)	$	43.4	$	(27.0)	$	(3.3)	$	(32.3)
Deferred	(88.8)		41.4		46.0		86.6		(51.3)		73.3		(50.5)		13.4
Total Federal	24.3		70.4		144.0		25.6		(7.9)		46.3		(53.8)		(18.9)
State and Local:
Current	26.6		2.2		8.8		(0.4)		10.9		(0.3)		—		(1.8)
Deferred	(45.5)		—		16.3		(7.0)		1.2		(1.8)		4.6		(4.5)
Total State and Local	(18.9)		2.2		25.1		(7.4)		12.1		(2.1)		4.6		(6.3)
Income Tax Expense (Benefit)	$	5.4	$	72.6	$	169.1	$	18.2	$	4.2	$	44.2	$	(49.2)	$	(25.2)

The following are reconciliations for the Registrants between the federal income taxes computed by multiplying pretax income by the federal statutory tax rate and the income taxes reported:

Year Ended December 31, 2024	AEP			AEP Texas			AEPTCo			APCo			I&M			OPCo			PSO			SWEPCo
	(in millions)
Net Income	$	2,975.8		$	420.1		$	688.4		$	421.7		$	391.4		$	305.6		$	249.3		$	325.7
Less: Equity Earnings	(1.4)			—			—			—			—			—			—			(1.4)
Income Tax Expense (Benefit)	(39.2)			102.1			190.3			75.1			(95.2)			52.4			(99.6)			(184.0)
Pretax Income	$	2,935.2		$	522.2		$	878.7		$	496.8		$	296.2		$	358.0		$	149.7		$	140.3
Income Taxes on Pretax Income at Statutory Rate (21%)	$	616.5		$	109.7		$	184.5		$	104.3		$	62.2		$	75.2		$	31.4		$	29.5
Increase (Decrease) in Income Taxes Resulting from the Following Items:
Reversal of Origination Flow-Through	20.5			0.8			2.7			6.6			4.0			2.7			0.4			2.1
Investment Tax Credit Amortization	(58.4)			(0.9)			—			0.1			(2.0)			0.1			(1.4)			(0.1)
Production Tax Credits	(214.2)			—			—			(0.3)			(69.0)			—			(73.8)			(70.7)
State and Local Income Taxes, Net	16.7			2.3			20.5			10.3			5.5			10.7			(0.6)			10.6
Removal Costs	(14.6)			—			—			(11.2)			(3.7)			—			—			—
AFUDC Equity	(46.5)			(9.6)			(18.8)			(5.3)			(2.8)			(4.9)			(1.6)			(2.8)
Tax Reform Excess ADIT Reversal	(91.6)			(5.1)			1.6			(30.1)			(15.5)			(31.1)			(5.5)			(4.0)
Remeasurement of Excess ADIT	(262.2)			6.4			—			—			(73.3)			—			(48.6)			(146.8)
Other	(5.4)			(1.5)			(0.2)			0.7			(0.6)			(0.3)			0.1			(1.8)
Income Tax Expense (Benefit)	$	(39.2)		$	102.1		$	190.3		$	75.1		$	(95.2)		$	52.4		$	(99.6)		$	(184.0)
Effective Income Tax Rate	(1.3)		%	19.6		%	21.7		%	15.1		%	(32.1)		%	14.6		%	(66.5)		%	(131.1)		%

.

Year Ended December 31, 2023	AEP			AEP Texas			AEPTCo			APCo			I&M			OPCo			PSO			SWEPCo
	(in millions)
Net Income	$	2,212.6		$	370.4		$	614.2		$	294.4		$	335.9		$	328.2		$	208.8		$	223.8
Less: Equity Earnings	(1.4)			—			—			—			—			—			—			(1.4)
Income Tax Expense (Benefit)	54.6			85.9			147.1			14.2			58.6			54.3			(53.6)			(33.3)
Pretax Income	$	2,265.8		$	456.3		$	761.3		$	308.6		$	394.5		$	382.5		$	155.2		$	189.1
Income Taxes on Pretax Income at Statutory Rate (21%)	$	475.8		$	95.8		$	159.9		$	64.8		$	82.8		$	80.3		$	32.6		$	39.7
Increase (Decrease) in Income Taxes Resulting from the Following Items:
Reversal of Origination Flow-Through	26.0			0.6			2.4			9.9			6.4			2.6			0.4			2.1
Investment Tax Credit Amortization	(50.3)			(0.7)			—			—			(1.6)			—			(1.4)			(0.2)
Production Tax Credits	(175.2)			—			—			(0.1)			—			—			(64.3)			(67.1)
State and Local Income Taxes, Net	43.7			2.1			0.7			9.9			17.5			3.9			3.5			(4.0)
Removal Costs	(22.0)			—			—			(5.1)			(11.8)			—			—			—
AFUDC Equity	(39.8)			(6.0)			(17.5)			(5.5)			(2.3)			(3.6)			(1.8)			(2.4)
Tax Reform Excess ADIT Reversal	(151.1)			(6.0)			1.7			(17.3)			(30.0)			(28.9)			(23.3)			(12.6)
Remeasurement of Excess ADIT	(46.0)			—			—			(46.0)			—			—			—			—
Federal Return to Provision	—			(0.1)			—			3.4			(2.5)			(0.4)			0.6			1.0
Disallowance Cost	—			—			—			—			—			—			—			12.0
Other	(6.5)			0.2			(0.1)			0.2			0.1			0.4			0.1			(1.8)
Income Tax Expense (Benefit)	$	54.6		$	85.9		$	147.1		$	14.2		$	58.6		$	54.3		$	(53.6)		$	(33.3)
Effective Income Tax Rate	2.4		%	18.8		%	19.3		%	4.6		%	14.9		%	14.2		%	(34.5)		%	(17.6)		%

Year Ended December 31, 2022	AEP			AEP Texas			AEPTCo			APCo			I&M			OPCo			PSO			SWEPCo
	(in millions)
Net Income	$	2,305.6		$	307.9		$	594.2		$	394.2		$	324.7		$	287.8		$	167.6		$	294.3
Less: Equity Earnings	(1.4)			—			—			—			—			(0.6)			—			(1.4)
Income Tax Expense (Benefit)	5.4			72.6			169.1			18.2			4.2			44.2			(49.2)			(25.2)
Pretax Income	$	2,309.6		$	380.5		$	763.3		$	412.4		$	328.9		$	331.4		$	118.4		$	267.7
Income Taxes on Pretax Income at Statutory Rate (21%)	$	485.0		$	79.9		$	160.3		$	86.6		$	69.1		$	69.6		$	24.9		$	56.2
Increase (Decrease) in Income Taxes Resulting from the Following Items:
Reversal of Origination Flow-Through	17.1			—			—			4.7			2.9			3.0			—			2.3
Investment Tax Credit Amortization	(14.3)			—			—			—			(3.1)			—			(1.6)			—
Production Tax Credits	(197.1)			—			—			—			—			—			(47.7)			(57.1)
State and Local Income Taxes, Net	(14.0)			1.7			19.8			(5.9)			9.6			(1.6)			4.3			(4.9)
Removal Costs	(26.5)			—			—			(9.8)			(12.4)			—			—			—
AFUDC Equity	(29.3)			(4.1)			(14.8)			(3.7)			(2.1)			(2.9)			—			—
Tax Reform Excess ADIT Reversal	(214.5)			(5.5)			—			(50.9)			(54.0)			(27.5)			(25.4)			(14.8)
Federal Return to Provision	(17.4)			—			—			(2.8)			(6.2)			3.5			(3.7)			—
Other	16.4			0.6			3.8			—			0.4			0.1			—			(6.9)
Income Tax Expense (Benefit)	$	5.4		$	72.6		$	169.1		$	18.2		$	4.2		$	44.2		$	(49.2)		$	(25.2)
Effective Income Tax Rate	0.2		%	19.1		%	22.2		%	4.4		%	1.3		%	13.3		%	(41.6)		%	(9.4)

Net Deferred Tax Liability

The following tables show elements of the net deferred tax liability and significant temporary differences for each Registrant. Amounts presented for 2023 were recast to allocate “Deferred State Income Taxes”, and other miscellaneous temporary differences, amongst other categories to substantively reflect the elements of the net deferred tax liability.

Year Ended December 31, 2024	AEP		AEP Texas		AEPTCo		APCo		I&M		OPCo		PSO		SWEPCo
	(in millions)
Deferred Tax Assets	$	2,651.9	$	139.1	$	172.6	$	379.1	$	1,072.2	$	186.5	$	266.9	$	292.8
Deferred Tax Liabilities	(12,624.3)		(1,461.8)		(1,451.2)		(2,412.6)		(2,248.0)		(1,387.6)		(1,197.5)		(1,564.1)
Net Deferred Tax Liabilities	$	(9,972.4)	$	(1,322.7)	$	(1,278.6)	$	(2,033.5)	$	(1,175.8)	$	(1,201.1)	$	(930.6)	$	(1,271.3)
Property Related Temporary Differences	$	(8,939.7)	$	(1,364.0)	$	(1,416.6)	$	(1,784.8)	$	(189.9)	$	(1,290.9)	$	(1,009.8)	$	(1,353.1)
Amounts Due to Customers for Future Income Taxes	779.6		109.3		121.4		119.0		73.1		95.6		80.7		90.2
Securitized Assets	(133.4)		(26.5)		—		(25.7)		—		—		—		(81.1)
Regulatory Assets	(966.2)		(63.2)		(0.2)		(302.4)		(49.2)		(45.3)		(53.1)		(87.0)
Accrued Nuclear Decommissioning	(1,052.2)		—		—		—		(1,052.2)		—		—		—
Net Operating Loss Carryforward	110.3		—		2.5		0.4		—		2.9		27.8		36.5
Valuation Allowance	(35.0)		—		(0.1)		—		—		—		—		—
Tax Credit Carryforward	197.5		4.3		—		0.1		39.6		38.5		26.5		31.7
Operating Lease Liability	145.3		12.3		0.3		16.2		13.5		13.3		27.1		35.7
Investment in Partnership	(302.1)		—		—		(0.1)		—		(0.8)		—		(1.5)
All Other, Net	223.5		5.1		14.1		(56.2)		(10.7)		(14.4)		(29.8)		57.3
Net Deferred Tax Liabilities	$	(9,972.4)	$	(1,322.7)	$	(1,278.6)	$	(2,033.5)	$	(1,175.8)	$	(1,201.1)	$	(930.6)	$	(1,271.3)

Year Ended December 31, 2023	AEP		AEP Texas		AEPTCo		APCo		I&M		OPCo		PSO		SWEPCo
	(in millions)
Deferred Tax Assets	$	3,216.1	$	173.6	$	188.0	$	472.9	$	1,014.0	$	271.5	$	282.4	$	441.5
Deferred Tax Liabilities	(12,631.8)		(1,401.4)		(1,335.7)		(2,484.8)		(2,183.9)		(1,424.2)		(1,113.6)		(1,620.8)
Net Deferred Tax Liabilities	$	(9,415.7)	$	(1,227.8)	$	(1,147.7)	$	(2,011.9)	$	(1,169.9)	$	(1,152.7)	$	(831.2)	$	(1,179.3)
Property Related Temporary Differences	$	(8,809.0)	$	(1,274.0)	$	(1,304.2)	$	(1,805.9)	$	(315.6)	$	(1,243.2)	$	(941.9)	$	(1,306.0)
Amounts Due to Customers for Future Income Taxes	898.1		109.3		120.8		128.0		103.2		104.6		99.0		142.5
Securitized Assets	(81.8)		(46.7)		—		(32.6)		—		(5.3)		—		2.8
Regulatory Assets	(825.9)		(56.2)		(0.7)		(284.3)		(27.7)		(50.1)		(67.2)		(146.9)
Accrued Nuclear Decommissioning	(923.5)		—		—		—		(923.5)		—		—		—
Net Operating Loss Carryforward	155.6		—		3.9		0.2		—		2.6		25.3		47.5
Valuation Allowance	(37.4)		—		(0.1)		—		—		—		—		(1.8)
Tax Credit Carryforward	321.4		13.7		—		0.1		7.2		41.0		53.8		68.6
Operating Lease Liability	154.7		17.3		0.4		18.0		14.1		15.4		28.2		33.3
Investment in Partnership	(296.3)		—		—		(0.1)		—		(0.7)		—		(1.5)
All Other, Net	28.4		8.8		32.2		(35.3)		(27.6)		(17.0)		(28.4)		(17.8)
Net Deferred Tax Liabilities	$	(9,415.7)	$	(1,227.8)	$	(1,147.7)	$	(2,011.9)	$	(1,169.9)	$	(1,152.7)	$	(831.2)	$	(1,179.3)

Federal and State Income Tax Audit Status

AEP is not currently under IRS audit and the statute of limitations (“SOL”) for the IRS to examine AEP and subsidiaries originally filed federal return has expired for tax years prior to 2017. AEP agreed to extend the SOL on the 2017-2020 tax returns to May 31, 2025, to allow the Congressional Joint Committee on Taxation (“JCT”) adequate time to complete its review of the now closed IRS audit. Following JCT’s approval, AEP received IRS confirmation that tax years 2017-2020 are now effectively closed as they only remain open for changes to other non-consolidated entities that AEP holds an interest in.

AEP and subsidiaries file income tax returns in various state and local jurisdictions. AEP and subsidiaries are not currently under any state and local income tax examinations. Generally, the SOL have expired for tax years prior to 2017. In addition, management is monitoring and continues to evaluate the potential impact of federal legislation and corresponding state conformity.

Net Income Tax Operating Loss Carryforward

As of December 31, 2024, AEP, OPCo, PSO, and SWEPCo have pretax state NOLC as indicated in the table below. Net of tax, the NOLCs for AEP and subsidiaries amount to $110.3 million of future tax benefit. Additionally, the amounts presented below for OPCo, PSO, and SWEPCo amount to $2.7 million, $27.8 million, and $36.1 million, respectively.:

		State Net Income
		Tax Operating Loss		Years of
Company	State/Municipality	Carryforward		Expiration
		(in millions)
AEP	Arkansas	$	273.9	2031	-	2034
AEP	Colorado	70.5		2041
AEP	Illinois	53.9		2039	-	2041
AEP	Kentucky	186.7		2030	-	2037
AEP	Louisiana	644.8		NA
AEP	Michigan	30.9		2029	-	2032
AEP	Ohio Municipal	2,155.8		2025	-	2029
AEP	Oklahoma	889.8		2037
AEP	Pennsylvania	61.2		2030	-	2044
AEP	Tennessee	46.1		2032	-	2039
OPCo	Ohio Municipal	93.7		2025	-	2029
PSO	Oklahoma	1,010.0		2037
SWEPCo	Arkansas	273.5		2031	-	2034
SWEPCo	Louisiana	634.5		NA

NA    Not applicable.

Tax Credit Carryforward

Federal and state net income tax operating losses sustained in 2017, 2019 and 2021 resulted in unused federal and state income tax credits.  As of December 31, 2024, the Registrants have federal tax credit carryforwards and AEP and PSO have state tax credit carryforwards as indicated in the table below.  If these credits are not utilized, federal general business tax credits will expire in the years 2036 through 2041 and state tax credits will remain available indefinitely.

	Total Federal		Total State
	Tax Credit		Tax Credit
Company	Carryforward		Carryforward
	(in millions)
AEP	$	197.9	40.2
I&M	37.5		—
PSO	26.5		40.2
SWEPCo	31.7		—

The Registrants anticipate future federal taxable income will be sufficient to realize the tax benefits of the federal tax credits before they expire unused.

Valuation Allowance

AEP assesses the available positive and negative evidence to estimate whether sufficient future taxable income of the appropriate tax character will be generated to realize the benefits of existing deferred tax assets. When the evaluation of the evidence indicates that it is more-likely-than-not that AEP will not be able to realize the benefits of existing deferred tax assets, a valuation allowance is recorded to reduce existing deferred tax assets to the net realizable amount. Objective evidence evaluated includes whether AEP has a history of recognizing income, future reversals of existing temporary differences and tax planning strategies.

Valuation allowance activity for the years ended December 31, 2024, 2023 and 2022 were not material.

Uncertain Tax Positions

The amount and activity of unrecognized tax benefits was not material for the Registrants for the years ended December 31, 2024, 2023 and 2022. Management believes that there will be no significant net increase or decrease in unrecognized benefits within 12 months of the reporting date.  The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate for AEP as of December 31, 2024, 2023 and 2022 were $19 million, $13 million, and $23 million, respectively.