INCOME TAXES

12 Months Ended

Dec. 31, 2025

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, 2025	AEP		AEP Texas		AEPTCo		APCo		I&M		OPCo		PSO		SWEPCo
	(in millions)
Federal:
Current	$	(209)	$	27	$	148	$	42	$	(3)	$	27	$	(221)	$	(180)
Deferred	298		70		(173)		43		(14)		42		149		89
Total Federal	89		97		(25)		85		(17)		69		(72)		(91)
State and Local:
Current	28		4		18		2		19		(2)		—		3
Deferred	12		—		22		(1)		(1)		5		2		(7)
Total State and Local	40		4		40		1		18		3		2		(4)
Income Tax Expense (Benefit)	$	129	$	101	$	15	$	86	$	1	$	72	$	(70)	$	(95)

Year Ended December 31, 2024	AEP		AEP Texas		AEPTCo		APCo		I&M		OPCo		PSO		SWEPCo
	(in millions)
Federal:
Current	$	(3)	$	22	$	75	$	80	$	17	$	42	$	(119)	$	(112)
Deferred	(58)		77		89		(18)		(119)		(3)		20		(86)
Total Federal	(61)		99		164		62		(102)		39		(99)		(198)
State and Local:
Current	(5)		3		6		13		7		3		—		2
Deferred	27		—		20		—		—		10		(1)		12
Total State and Local	22		3		26		13		7		13		(1)		14
Income Tax Expense (Benefit)	$	(39)	$	102	$	190	$	75	$	(95)	$	52	$	(100)	$	(184)

Year Ended December 31, 2023	AEP		AEP Texas		AEPTCo		APCo		I&M		OPCo		PSO		SWEPCo
	(in millions)
Federal:
Current	$	(117)	$	20	$	94	$	62	$	94	$	46	$	(61)	$	(88)
Deferred	116		63		52		(60)		(57)		3		3		60
Total Federal	(1)		83		146		2		37		49		(58)		(28)
State and Local:
Current	69		3		9		6		21		—		—		1
Deferred	(13)		—		(8)		6		1		5		4		(6)
Total State and Local	56		3		1		12		22		5		4		(5)
Income Tax Expense (Benefit)	$	55	$	86	$	147	$	14	$	59	$	54	$	(54)	$	(33)

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,
AEP	2025					2024					2023
	(dollars in millions)
Net Income	$	3,696				$	2,976				$	2,213
Income Tax Expense (Benefit)	129					(39)					55
Pretax Income	$	3,825				$	2,937				$	2,268
	Amount			Percent		Amount			Percent		Amount			Percent
U.S. Federal Statutory Tax Rate	$	803		21.0	%	$	617		21.0	%	$	476		21.0	%
State and Local Income Taxes, Net (a)	31			0.8	%	17			0.6	%	44			1.9	%
Tax Credits:
Production Tax Credits	(244)			(6.4)	%	(214)			(7.3)	%	(175)			(7.7)	%
Investment Tax Credits	(3)			(0.1)	%	(58)			(2.0)	%	(50)			(2.2)	%
Other Credits	(4)			(0.1)	%	(9)			(0.3)	%	(1)			—	%
Non-Taxable or Non-Deductible Items	—			—	%	(3)			(0.1)	%	1			—	%
Changes in Unrecognized Tax Benefits	3			0.1	%	7			0.2	%	(5)			(0.2)	%
Other Adjustments:
Reversal of Origination Flow-Through	18			0.5	%	22			0.7	%	24			1.1	%
Tax Reform Excess ADIT Reversal	(62)			(1.6)	%	(92)			(3.1)	%	(151)			(6.7)	%
Remeasurement of Excess ADIT	(383)			(10.0)	%	(262)			(8.9)	%	(46)			(2.0)	%
AFUDC Equity	(41)			(1.1)	%	(42)			(1.4)	%	(38)			(1.7)	%
Other	11			0.3	%	(22)			(0.7)	%	(24)			(1.1)	%
Income Tax Expense (Benefit)	$	129				$	(39)				$	55
Effective Income Tax Rate	3.4		%			(1.3)		%			2.4		%

(a)     In 2025, state taxes in West Virginia and local taxes in Ohio contributed to the majority of the tax effect. In 2024, local taxes in Ohio contributed to the majority of the tax effect. In 2023, state taxes in Indiana and West Virginia contributed to the majority of the tax effect.

	Year Ended December 31,
AEP Texas	2025					2024					2023
	(dollars in millions)
Net Income	$	488				$	420				$	370
Income Tax Expense	101					102					86
Pretax Income	$	589				$	522				$	456
	Amount			Percent		Amount			Percent		Amount			Percent
U.S. Federal Statutory Tax Rate	$	124		21.0	%	$	110		21.0	%	$	96		21.0	%
State and Local Income Taxes, Net (a)	3			0.5	%	2			0.4	%	2			0.4	%
Tax Credits	(1)			(0.2)	%	(1)			(0.2)	%	(1)			(0.2)	%
Other Adjustments:
Tax Reform Excess ADIT Reversal	(11)			(1.9)	%	(5)			(1.0)	%	(6)			(1.3)	%
Remeasurement of Excess ADIT	—			—	%	6			1.1	%	—			—	%
AFUDC Equity	(10)			(1.7)	%	(9)			(1.7)	%	(5)			(1.1)	%
Other	(4)			(0.6)	%	(1)			—	%	—			—	%
Income Tax Expense	$	101				$	102				$	86
Effective Income Tax Rate	17.1		%			19.6		%			18.8		%

(a)     State taxes in Texas contributed to the majority of the tax effect.

	Year Ended December 31,
AEPTCo	2025					2024					2023
	(dollars in millions)
Net Income	$	1,184				$	688				$	614
Income Tax Expense	15					190					147
Pretax Income	$	1,199				$	878				$	761
	Amount			Percent		Amount			Percent		Amount			Percent
U.S. Federal Statutory Tax Rate	$	252		21.0	%	$	185		21.0	%	$	160		21.0	%
State and Local Income Taxes, Net (a)	31			2.6	%	20			2.3	%	1			0.1	%
Other Adjustments:
Remeasurement of Excess ADIT	(256)			(21.4)	%	—			—	%	—			—	%
AFUDC Equity	(16)			(1.3)	%	(16)			(1.8)	%	(15)			(2.0)	%
Other	4			0.4	%	1			0.2	%	1			0.2	%
Income Tax Expense	$	15				$	190				$	147
Effective Income Tax Rate	1.3		%			21.7		%			19.3		%

(a)     In 2025 and 2024, state taxes in Indiana and West Virginia contributed to the majority of the tax effect. In 2023, state taxes in West Virginia contributed to the majority of the tax effect.

	Year Ended December 31,
APCo	2025					2024					2023
	(dollars in millions)
Net Income	$	457				$	422				$	294
Income Tax Expense	86					75					14
Pretax Income	$	543				$	497				$	308
	Amount			Percent		Amount			Percent		Amount			Percent
U.S. Federal Statutory Tax Rate	$	114		21.0	%	$	104		21.0	%	$	65		21.0	%
State and Local Income Taxes, Net (a)	1			0.2	%	10			2.0	%	10			3.2	%
Tax Credits	(4)			(0.7)	%	(1)			(0.2)	%	—			—	%
Other Adjustments:
Reversal of Origination Flow-Through	6			1.1	%	5			1.0	%	9			2.9	%
Tax Reform Excess ADIT Reversal	(15)			(2.8)	%	(30)			(6.0)	%	(17)			(5.5)	%
Remeasurement of Excess ADIT	(24)			(4.4)	%	—			—	%	(46)			(14.9)	%
Removal Costs	(5)			(0.9)	%	(11)			(2.2)	%	(5)			(1.6)	%
AFUDC Equity	(2)			(0.4)	%	(2)			(0.4)	%	(4)			(1.3)	%
Flow-Through of CAMT	18			3.3	%	—			—	%	—			—	%
Other	(3)			(0.6)	%	—			(0.1)	%	2			0.8	%
Income Tax Expense	$	86				$	75				$	14
Effective Income Tax Rate	15.8		%			15.1		%			4.6		%

(a)     In 2025, state taxes in Virginia and West Virginia contributed to the majority of the tax effect. In 2024 and 2023, state taxes in West Virginia contributed to the majority of the tax effect.

	Year Ended December 31,
I&M	2025					2024					2023
	(dollars in millions)
Net Income	$	414				$	391				$	336
Income Tax Expense (Benefit)	1					(95)					59
Pretax Income	$	415				$	296				$	395
	Amount			Percent		Amount			Percent		Amount			Percent
U.S. Federal Statutory Tax Rate	$	87		21.0	%	$	62		21.0	%	$	83		21.0	%
State and Local Income Taxes, Net (a)	14			3.4	%	6			2.0	%	18			4.6	%
Tax Credits:
Production Tax Credits	(53)			(12.8)	%	(69)			(23.3)	%	—			—	%
Other Credits	(3)			(0.7)	%	(2)			(0.7)	%	(2)			(0.5)	%
Other Adjustments:
Reversal of Origination Flow-Through	6			1.4	%	5			1.7	%	6			1.5	%
Tax Reform Excess ADIT Reversal	(10)			(2.4)	%	(16)			(5.4)	%	(33)			(8.4)	%
Remeasurement of Excess ADIT	(38)			(9.2)	%	(73)			(24.7)	%	—			—	%
Removal Costs	—			—	%	(6)			(2.0)	%	(12)			(3.0)	%
Other	(2)			(0.5)	%	(2)			(0.7)	%	(1)			(0.3)	%
Income Tax Expense (Benefit)	$	1				$	(95)				$	59
Effective Income Tax Rate	0.2		%			(32.1)		%			14.9		%

(a)     State Taxes in Indiana contributed to the majority of the tax effect.

	Year Ended December 31,
OPCo	2025					2024					2023
	(dollars in millions)
Net Income	$	328				$	306				$	328
Income Tax Expense	72					52					54
Pretax Income	$	400				$	358				$	382
	Amount			Percent		Amount			Percent		Amount			Percent
U.S. Federal Statutory Tax Rate	$	84		21.0	%	$	75		21.0	%	$	80		21.0	%
State and Local Income Taxes, Net (a)	3			0.8	%	11			3.1	%	4			1.0	%
Other Adjustments:
Tax Reform Excess ADIT Reversal	(12)			(3.0)	%	(31)			(8.7)	%	(29)			(7.6)	%
AFUDC Equity	(4)			(1.0)	%	(4)			(1.1)	%	(3)			(0.8)	%
Other	1			0.2	%	1			0.3	%	2			0.6	%
Income Tax Expense	$	72				$	52				$	54
Effective Income Tax Rate	18.0		%			14.6		%			14.2		%

(a)     Local taxes in Ohio municipalities contributed to the majority of the tax effect.

	Year Ended December 31,
PSO	2025					2024					2023
	(dollars in millions)
Net Income	$	252				$	249				$	209
Income Tax Expense (Benefit)	(70)					(100)					(54)
Pretax Income	$	182				$	149				$	155
	Amount			Percent		Amount			Percent		Amount			Percent
U.S. Federal Statutory Tax Rate	$	38		21.0	%	$	31		21.0	%	$	33		21.0	%
State and Local Income Taxes, Net (a)	2			1.1	%	(1)			(0.7)	%	3			1.9	%
Tax Credits:
Production Tax Credits	(88)			(48.4)	%	(74)			(49.7)	%	(64)			(41.3)	%
Other Credits	(1)			(0.5)	%	(2)			(1.3)	%	(1)			(0.6)	%
Other Adjustments:
Tax Reform Excess ADIT Reversal	(5)			(2.7)	%	(6)			(4.0)	%	(23)			(14.8)	%
Remeasurement of Excess ADIT	(14)			(7.7)	%	(49)			(32.9)	%	—			—	%
Other	(2)			(1.3)	%	1			1.1	%	(2)			(0.7)	%
Income Tax Expense (Benefit)	$	(70)				$	(100)				$	(54)
Effective Income Tax Rate	(38.5)		%			(66.5)		%			(34.5)		%

(a)     State taxes in Oklahoma contributed to the majority of the tax effect.

	Year Ended December 31,
SWEPCo	2025					2024					2023
	(dollars in millions)
Net Income	$	391				$	326				$	224
Income Tax Expense (Benefit)	(95)					(184)					(33)
Pretax Income	$	296				$	142				$	191
	Amount			Percent		Amount			Percent		Amount			Percent
U.S. Federal Statutory Tax Rate	$	62		21.0	%	$	30		21.0	%	$	40		21.0	%
State and Local Income Taxes, Net (a)	(3)			(1.0)	%	11			7.7	%	(4)			(2.1)	%
Tax Credits
Production Tax Credits	(98)			(33.1)	%	(71)			(50.0)	%	(67)			(35.1)	%
Non-Taxable or Non-Deductible Items	—			—	%	(1)			(0.7)	%	—			—	%
Other Adjustments:
Tax Reform Excess ADIT Reversal	(6)			(2.0)	%	(4)			(2.8)	%	(13)			(6.8)	%
Remeasurement of Excess ADIT	(46)			(15.5)	%	(147)			(103.5)	%	—			—	%
Disallowance Cost	—			—	%	—			—	%	12			6.3	%
Other	(4)			(1.5)	%	(2)			(1.3)	%	(1)			(0.6)	%
Income Tax Expense (Benefit)	$	(95)				$	(184)				$	(33)
Effective Income Tax Rate	(32.1)		%			(129.6)		%			(17.3)		%

(a)     State taxes in Louisiana contributed to the majority of the tax effect.

Income Taxes Paid

The following tables show the amount of income taxes paid or (received) on an annual basis, disaggregated by federal and state jurisdictions, for each Registrant:

Year Ended December 31, 2025	AEP		AEP Texas		AEPTCo		APCo		I&M		OPCo		PSO		SWEPCo
	(dollars in millions)
Federal	$	70	$	46	$	191	$	88	$	23	$	62	$	(158)	$	(91)
State and Local:
IN	$	16	$	—	$	11	$	—	$	14	$	—	$	—	$	—
MI	—		—		—		—		4		—		—		—
TX	5		4		—		—		—		—		—		1
WV	8		—		11		17		1		—		—		—
All Other	4		—		1		—		1		—		—		—
Total To/(From) Tax Authority	$	103	$	50	$	214	$	105	$	43	$	62	$	(158)	$	(90)
Transfer Credits	(187)		—		—		—		—		—		(90)		(97)
Total Cash Paid/(Received)	$	(84)	$	50	$	214	$	105	$	43	$	62	$	(248)	$	(187)

Year Ended December 31, 2024	AEP		AEP Texas		AEPTCo		APCo		I&M		OPCo		PSO		SWEPCo
	(dollars in millions)
Federal	$	100	$	11	$	43	$	48	$	17	$	19	$	(15)	$	(15)
State and Local:
IN	$	7	$	—	$	—	$	—	$	7	$	—	$	—	$	—
WV	9		—		—		—		—		—		—		—
All Other	17		—		—		—		—		—		—		—
Total To/(From) Tax Authority	$	133	$	11	$	43	$	48	$	24	$	19	$	(15)	$	(15)
Transfer Credits	(202)		—		—		—		—		—		(96)		(89)
Total Cash Paid/(Received)	$	(69)	$	11	$	43	$	48	$	24	$	19	$	(111)	$	(104)

Year Ended December 31, 2023	AEP		AEP Texas		AEPTCo		APCo		I&M		OPCo		PSO		SWEPCo
	(dollars in millions)
Federal	$	38	$	12	$	87	$	47	$	93	$	39	$	(11)	$	(41)
State and Local:
IN	$	16	$	—	$	—	$	—	$	16	$	—	$	—	$	—
OH	10		—		1		—		—		—		—		—
TX	4		—		—		—		—		—		—		—
All Other	10		—		—		—		—		—		—		—
Total To/(From) Tax Authority	$	78	$	12	$	88	$	47	$	109	$	39	$	(11)	$	(41)
Transfer Credits	(102)		—		—		—		—		—		(35)		(41)
Total Cash Paid/(Received)	$	(24)	$	12	$	88	$	47	$	109	$	39	$	(46)	$	(82)

Net Deferred Tax Liability

The following tables show elements of the net deferred tax liability and significant temporary differences for each Registrant:

Year Ended December 31, 2025	AEP		AEP Texas		AEPTCo		APCo		I&M		OPCo		PSO		SWEPCo
	(dollars in millions)
Deferred Tax Assets	$	2,786	$	131	$	170	$	411	$	1,160	$	171	$	287	$	328
Deferred Tax Liabilities	(13,737)		(1,561)		(1,651)		(2,541)		(2,379)		(1,439)		(1,400)		(1,786)
Net Deferred Tax Liabilities	$	(10,951)	$	(1,430)	$	(1,481)	$	(2,130)	$	(1,219)	$	(1,268)	$	(1,113)	$	(1,458)
Property Related Temporary Differences	$	(9,456)	$	(1,442)	$	(1,526)	$	(1,881)	$	(49)	$	(1,333)	$	(1,195)	$	(1,477)
Amounts Due to Customers for Future Income Taxes	641		105		44		109		57		92		74		74
Securitized Assets	(211)		(28)		—		(19)		—		—		—		(50)
Regulatory Assets	(902)		(73)		(4)		(308)		(46)		(48)		(60)		(119)
Accrued Nuclear Decommissioning	(1,180)		—		—		—		(1,180)		—		—		—
Net Operating Loss Carryforward	155		—		—		—		—		—		44		45
Valuation Allowance	(49)		—		—		—		—		—		—		(3)
Tax Credit Carryforward	148		10		—		33		—		43		33		—
Operating Lease Liability	166		12		1		23		14		11		32		50
Investment in Partnership	(306)		—		—		—		—		(1)		—		(1)
All Other, Net	43		(14)		4		(87)		(15)		(32)		(41)		23
Net Deferred Tax Liabilities	$	(10,951)	$	(1,430)	$	(1,481)	$	(2,130)	$	(1,219)	$	(1,268)	$	(1,113)	$	(1,458)

Year Ended December 31, 2024	AEP		AEP Texas		AEPTCo		APCo		I&M		OPCo		PSO		SWEPCo
	(dollars in millions)
Deferred Tax Assets	$	2,652	$	139	$	173	$	379	$	1,072	$	187	$	267	$	293
Deferred Tax Liabilities	(12,624)		(1,462)		(1,452)		(2,413)		(2,248)		(1,388)		(1,198)		(1,564)
Net Deferred Tax Liabilities	$	(9,972)	$	(1,323)	$	(1,279)	$	(2,034)	$	(1,176)	$	(1,201)	$	(931)	$	(1,271)
Property Related Temporary Differences	$	(8,940)	$	(1,364)	$	(1,417)	$	(1,785)	$	(190)	$	(1,291)	$	(1,010)	$	(1,353)
Amounts Due to Customers for Future Income Taxes	780		109		121		119		73		96		81		90
Securitized Assets	(133)		(27)		—		(26)		—		—		—		(81)
Regulatory Assets	(966)		(63)		—		(302)		(49)		(45)		(53)		(87)
Accrued Nuclear Decommissioning	(1,052)		—		—		—		(1,052)		—		—		—
Net Operating Loss Carryforward	110		—		2		—		—		3		28		36
Valuation Allowance	(35)		—		—		—		—		—		—		—
Tax Credit Carryforward	198		4		—		—		40		39		27		32
Operating Lease Liability	145		12		—		16		14		13		27		36
Investment in Partnership	(302)		—		—		—		—		(1)		—		(2)
All Other, Net	223		6		15		(56)		(12)		(15)		(31)		58
Net Deferred Tax Liabilities	$	(9,972)	$	(1,323)	$	(1,279)	$	(2,034)	$	(1,176)	$	(1,201)	$	(931)	$	(1,271)

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 2022. In July 2025, AEP received notification that its 2023 federal income tax return was selected for IRS examination. However, this examination has yet to begin.

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 2022. 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, 2025, AEP, PSO and SWEPCo have state income tax net operating loss deferred tax assets as indicated in the table below:

		Future State
		Income		Years of
Company	State/Municipality	Tax Benefit		Expiration
AEP	Arkansas	$	15	2031	-	2035
AEP	Illinois	5		2039	-	2041
AEP	Kentucky	11		2030	-	2037
AEP	Louisiana	41		Indefinite
AEP	Michigan	1		2029	-	2032
AEP	Ohio Municipal	62		2026	-	2030
AEP	Oklahoma	54		2037
AEP	Tennessee	4		2032	-	2040
PSO	Oklahoma	55		2037
SWEPCo	Arkansas	15		2031	-	2035
SWEPCo	Louisiana	41		Indefinite

Tax Credit Carryforward

As of December 31, 2025, AEP and the Registrants have federal tax credit carryforwards as indicated in the table below. The federal tax credit carryforwards are entirely CAMT credits which have an indefinite carryforward period. AEP and the Registrants anticipate future federal taxable income will be sufficient to realize the tax benefits of the CAMT credits.

As of December 31, 2025, AEP and PSO have state tax credit carryforwards as indicated in the table below, which have an indefinite carryforward period.

	Total Federal		Total State
	Tax Credit		Tax Credit
Company	Carryforward		Carryforward
	(dollars in millions)
AEP	$	108	$	41
AEP Texas	10		—
APCo	28		—
OPCo	43		—
PSO	—		41

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, 2025, 2024 and 2023 were not material.

Federal Legislation

On July 4, 2025, President Trump signed H.R. 1 into law, commonly known as the One Big Beautiful Bill Act (OBBBA). This budget reconciliation legislation modifies and accelerates the phase out of technology neutral PTCs and ITCs available for wind and solar projects, adds new restrictions to guard against certain foreign ownership or influence with respect to otherwise credit-eligible projects and makes 100% bonus depreciation permanent for certain non-regulated entities. With the exception of bonus depreciation, this legislation is prospective and has no material impact on the current period financial statements.

On August 15, 2025, the Department of Treasury and the IRS issued new and revised wind and solar tax credit guidance, Notice 2025-42, which modified the definition of “begin construction” for tax purposes by eliminating the previously available 5% cost safe harbor standard for projects that begin construction after September 1, 2025. This guidance is not expected to have a material impact on the Registrants.

On September 30, 2025, the Department of Treasury and the IRS issued interim guidance regarding the application of CAMT, Notice 2025-49. This guidance is not expected to have a material impact on the Registrants.

Additional significant guidance from the Department of Treasury and the IRS is expected on the tax provisions in recently enacted legislation. AEP will continue to monitor any issued guidance and evaluate the impact on AEP’s future net income, cash flows and financial condition.