INCOME TAXES

12 Months Ended

Sep. 30, 2024

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

For a discussion of our income tax accounting policies and other income tax-related information see Note 2.

The following table presents our U.S. and foreign components of pre-tax income for each respective period.

	Year ended September 30,
$ in millions	2024		2023		2022
U.S.	$	2,534	$	2,193	$	1,907
Foreign	109		87		115
Pre-tax income	$	2,643	$	2,280	$	2,022

The following table details the total income tax provision/(benefit) allocation for each respective period.

	Year ended September 30,
$ in millions	2024		2023		2022
Included in:
Net income	$	575	$	541	$	513
Equity, arising from available-for-sale securities recorded through OCI	149		3		(311)
Equity, arising from cash flow hedges recorded through OCI	(12)		—		24
Equity, arising from currency translations, net of the impact of net investment hedges recorded through OCI	—		(4)		23
Total provision for income taxes	$	712	$	540	$	249

The following table details our provision/(benefit) for income taxes included in net income for each respective period.

	Year ended September 30,
$ in millions	2024		2023		2022
Current:
Federal	$	486	$	468	$	406
State and local	131		122		91
Foreign	41		39		32
Total current	$	658	$	629	$	529
Deferred:
Federal	(68)		(59)		(10)
State and local	(12)		(16)		(3)
Foreign	(3)		(13)		(3)
Total deferred	$	(83)	$	(88)	$	(16)
Total provision for income taxes included in net income	$	575	$	541	$	513

The following table details a reconciliation of the provision for income taxes at the U.S. federal statutory income tax rate to our actual provision for income taxes and the effective income tax rate for each respective period.

	Year ended September 30,
	2024				2023				2022
$ in millions	Amount		Rate		Amount		Rate		Amount		Rate
Provision calculated at statutory rate	$	555	21.0	%	$	479	21.0	%	$	425	21.0	%
State income tax, net of federal benefit	87		3.3	%	83		3.6	%	65		3.2	%
Nondeductible executive compensation	13		0.5	%	13		0.6	%	9		0.4	%
Foreign tax rate differential	10		0.4	%	8		0.4	%	4		0.2	%
(Gains)/losses on company-owned life insurance policies which are not subject to tax	(51)		(1.9)	%	(22)		(1.0)	%	36		1.8	%
Federal tax credits (1)	(25)		(1.0)	%	(15)		(0.7)	%	(17)		(0.8)	%
Excess tax benefits related to share-based compensation (2)	(20)		(0.8)	%	(21)		(0.9)	%	(22)		(1.1)	%
Nondeductible fines and penalties (3)	(6)		(0.2)	%	18		0.8	%	—		—	%
Other, net	12		0.5	%	(2)		(0.1)	%	13		0.7	%
Total	$	575	21.8	%	$	541	23.7	%	$	513	25.4	%

(1)Included investment tax credits of $20 million, $11 million, and $15 million for the years ended September 30, 2024, 2023, and 2022, respectively, primarily related to our equity investments in LIHTC funds and historic tax credit funds, as well as certain renewable energy tax credits. “Federal tax credits” in the preceding table excluded tax credits on equity investments accounted for under the proportional amortization method. Such tax credits and the related amortization are included in “Other, net” in the preceding table.

(2)Excess tax benefits related to share-based compensation were primarily attributable to the increase in fair value of our RSUs between grant date and delivery date which was $91 million, $95 million, and $101 million for the years ended September 30, 2024, 2023, and 2022, respectively.

(3)The year ended September 30, 2024, reflected the favorable impact of a legal and regulatory matters reserve release while the year ended September 30, 2023, reflected the impact of provisions for legal and regulatory matters.

We hold equity investments in certain structures which deliver tax benefits that qualify for the application of the proportional amortization method, whereby such investment is amortized in proportion to the allocation of tax benefits received in each year, and the investment amortization and the tax benefits are presented on a net basis within “Provision for income taxes” on our Consolidated Statements of Income and Comprehensive Income. See Note 2 for additional information. For the years ended September 30, 2024 and 2023, the amortization of renewable energy tax credit investments accounted for under the proportional amortization method was $28 million and $86 million, respectively, and we recognized offsetting tax credits of $28 million and $81 million, respectively. For the year ended September 30, 2023, we also recognized other tax benefits related to such investments of $9 million. For both the years ended September 30, 2024 and 2023, the amortization of LIHTC investments accounted for under the proportional amortization method was $3 million, and we recognized offsetting tax credits of $3 million. Such amounts are reflected in “Other, net” in the preceding table. There was no such investment amortization for the year ended September 30, 2022. As of September 30, 2024, we had $63 million of remaining commitments related to a renewable energy tax credit investment accounted for under the proportional amortization method, which was accrued within “Other payables” on our Consolidated Statements of Financial Condition and is expected to be funded in our fiscal 2025 upon the project satisfying certain conditions. The unamortized equity investment related to this investment was $61 million and was included in “Other assets” on our Consolidated Statements of Financial Condition as of September 30, 2024.

Deferred income taxes are provided for the effects of temporary differences between the tax basis of an asset or liability and its reported amount in the financial statements. These temporary differences result in taxable or deductible amounts in future years. The cumulative effects of temporary differences that give rise to significant portions of the deferred tax asset/(liability) items are detailed in the following table.

	September 30,
$ in millions	2024		2023
Deferred tax assets:
Deferred compensation	$	433	$	338
Unrealized loss associated with available-for-sale securities	161		310
Allowances for credit losses	140		140
Lease liabilities	123		135
Accrued expenses	46		56
Unrealized loss associated with loan portfolios	32		46
Net operating losses and credit carryforwards	26		19
Other	19		21
Total deferred tax assets	980		1,065
Less: valuation allowance	(9)		(5)
Total deferred tax assets, net of valuation allowance	971		1,060
Deferred tax liabilities:
Goodwill and identifiable intangible assets	(138)		(131)
ROU lease assets	(134)		(141)
Property and equipment	(44)		(68)
Unrealized gain associated with cash flow hedges	(4)		(16)
Other	(4)		(1)
Total deferred tax liabilities	(324)		(357)
Net deferred tax assets	$	647	$	703
Classified as follows in the Consolidated Statements of Financial Condition:
Deferred income taxes, net	$	651	$	711
Other payables	(4)		(8)
Net deferred tax assets	$	647	$	703

We have various tax loss carryforwards that may provide future tax benefits. Related valuation allowances are established in accordance with accounting guidance for income taxes if it is management’s opinion that it is more likely than not that these benefits will not be realized. The following table presents deferred tax assets and valuation allowances relating to carryforwards for the periods indicated.

	Year ended September 30,
$ in millions	2024		2023		Expires beginning of fiscal year
Deferred tax asset:
U.S. Federal net operating losses (1)	$	8	$	8	Indefinitely
U.S. State net operating losses (1)	5		4		2027
Foreign net operating losses	13		7		2041
Total deferred tax asset related to carryforwards	$	26	$	19
Valuation allowance:
U.S. Federal net operating losses	$	2	$	1
U.S. State net operating losses	5		4
Foreign net operating losses	2		—
Net valuation allowance	$	9	$	5

(1)Both the federal and state net operating loss carryfowards relate to separate company entity filings. As a result, these losses are not able to be utilized in our consolidated filings.

As of September 30, 2024, total deferred tax assets, net of valuation allowance, aggregated to $971 million. We continue to believe that the realization of our deferred tax assets is more likely than not based on expectations of future taxable income.

The $4 million and $8 million of net deferred tax liabilities included in “Other payables” on our Consolidated Statements of Financial Condition as of September 30, 2024 and 2023, respectively, primarily arose from entities in the U.K., and accordingly were not netted against balances arising from our U.S. entities.

As of September 30, 2024, we considered substantially all undistributed earnings of non-U.S. subsidiaries to be permanently reinvested and have not provided for any U.S. deferred income taxes related to such subsidiaries as we expect our incremental tax cost of repatriating such offshore earnings to not be significant. As of September 30, 2024, we had approximately $578 million of cumulative undistributed earnings attributable to foreign subsidiaries. Because the time and manner of repatriation is uncertain, we cannot determine the impact of local taxes, withholding taxes, and foreign tax credits associated with the future repatriation of such earnings, and therefore cannot quantify the tax liability that would be payable in the event all such foreign earnings are repatriated.

As of September 30, 2024, the current tax receivable, which was included in “Other receivables, net” on our Consolidated Statements of Financial Condition, was $28 million, and there was no current tax payable. As of September 30, 2023, the current tax receivable was $9 million, and the current tax payable was $17 million.

Uncertain tax positions

We recognize the accrual of interest and penalties related to income tax matters in “Interest expense” and “Other” expense, respectively. As of September 30, 2024 and 2023, accrued interest and penalties were $14 million and $12 million, respectively.

The following table presents the aggregate changes in the balances for uncertain tax positions.

	Year ended September 30,
$ in millions	2024		2023		2022
Uncertain tax positions beginning of year	$	41	$	43	$	36
Increases for tax positions related to the current year	6		5		5
Increases for tax positions related to prior years	9		4		10
Decreases for tax positions related to prior years	(2)		(2)		(1)
Decreases due to lapsed statute of limitations	(6)		(8)		(7)
Decreases related to settlements	—		(1)		—
Uncertain tax positions end of year	$	48	$	41	$	43

The total amount of uncertain tax positions that, if recognized, would impact the effective tax rate (the items included in the preceding table after considering the federal tax benefit associated with any state tax provisions) was $41 million, $35 million, and $38 million at September 30, 2024, 2023 and 2022, respectively.  We anticipate that the uncertain tax position liability balance will decrease by approximately $22 million over the next 12 months due to expiration of statutes of limitations of federal and state tax returns.

RJF and its domestic subsidiaries are included in the consolidated income tax returns of RJF in the U.S. federal jurisdiction and various consolidated states. Our subsidiaries also file separate income tax returns in various state, local, and foreign jurisdictions. With few exceptions, we are generally no longer subject to U.S. federal or foreign income tax examination by tax authorities for fiscal years prior to fiscal 2021, and fiscal years prior to fiscal 2020 for state and local jurisdictions. Certain state and local and foreign tax returns are currently under various stages of audit and appeals processes.