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Income Taxes
 12 Months Ended
Dec. 31, 2023
Entity Information [Line Items]  
Income Taxes INCOME TAXES
IPALCO follows a policy of comprehensive interperiod income tax allocation. Investment tax credits related to utility property have been deferred and are being amortized over the estimated useful lives of the related property.

AES files federal and state income tax returns which consolidate IPALCO and its subsidiaries. Under a tax sharing agreement with AES, IPALCO is responsible for the income taxes associated with its own taxable income and records the provision for income taxes as if IPALCO and its subsidiaries each filed separate income tax returns. IPALCO is no longer subject to U.S. or state income tax examinations for tax years through 2016, but is open for all subsequent periods. IPALCO made tax sharing payments to AES of $0.0 million, $31.0 million and $27.5 million in 2023, 2022 and 2021, respectively.

Income Tax Provision

Federal and state income taxes charged to income are as follows: 
 202320222021
 (In Thousands)
Components of income tax expense:   
Current income taxes:   
Federal$(14,222)$22,539 $28,100 
State(3,716)6,026 8,218 
Total current income taxes(17,938)28,565 36,318 
Deferred income taxes:   
Federal24,885 (6,920)(7,286)
State7,768 214 (91)
Total deferred income taxes32,653 (6,706)(7,377)
Total income tax expense$14,715 $21,859 $28,941 

Effective and Statutory Rate Reconciliation

The provision for income taxes (including net investment tax credit adjustments) is different than the amount computed by applying the statutory tax rate to pretax income. The reasons for the difference, stated as a percentage of pretax income, are as follows: 
 202320222021
Federal statutory tax rate21.0 %21.0 %21.0 %
State income tax, net of federal tax benefit3.9 %3.9 %4.0 %
Depreciation flow through and amortization(12.9)%(7.8)%(6.3)%
AFUDC - equity(0.3)%0.9 %0.4 %
Noncontrolling interests in subsidiaries9.0 %— %— %
Other – net(0.2)%0.4 %0.4 %
Effective tax rate20.5 %18.4 %19.5 %
Deferred Income Taxes

The significant items comprising IPALCO’s net accumulated deferred tax liability recognized on the audited Consolidated Balance Sheets as of December 31, 2023 and 2022 are as follows:
 20232022
 (In Thousands)
Deferred tax liabilities:  
Relating to utility property, net$409,675 $341,473 
Regulatory assets recoverable through future rates108,823 123,669 
Other17,694 17,953 
Total deferred tax liabilities536,192 483,095 
Deferred tax assets:  
Investment tax credit5 6 
Regulatory liabilities including ARO168,619 167,725 
Investments in tax partnerships2,501 — 
Other3,579 2,723 
Total deferred tax assets174,704 170,454 
Deferred income tax liability – net$361,488 $312,641 

Uncertain Tax Positions

The following is a reconciliation of the beginning and ending amounts of unrecognized tax benefits for the years ended December 31, 2023, 2022 and 2021: 
 202320222021
 (In Thousands)
Unrecognized tax benefits at January 1$— $— $7,368 
Gross decreases – prior period tax positions— — (7,368)
Unrecognized tax benefits at December 31$— $— $— 

The prior period unrecognized tax benefits represent tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. As a result of the resolution of federal and state audits in 2021, IPALCO reviewed its uncertain positions and determined that they are more likely than not to be sustained upon examination by taxing authorities. Consequently, the uncertain tax positions were reversed; because of the impact of deferred tax accounting the reversal did not affect the annual effective tax rate but were reclassified to plant related deferred tax balances.

Tax years subsequent to 2016 remain open to examination by taxing authorities. While it is often difficult to predict the final outcome or the timing of resolution of any particular uncertain tax position, we believe unrecognized tax benefits of $0 at December 31, 2023 and 2022, respectively, is the appropriate accrual for our uncertain tax positions. However, audit outcomes and the timing of audit settlements and future events that would impact our previously recorded unrecognized tax benefits are subject to significant uncertainty. It is possible that the ultimate outcome of future examinations may exceed our provision for current unrecognized tax benefits.

Tax-related interest expense and income is reported as part of the provision for federal and state income taxes. Penalties, if incurred, would also be recognized as a component of tax expense. There are no interest or penalties applicable to the periods contained in this report.
Indianapolis Power And Light Company  
Entity Information [Line Items]  
Income Taxes INCOME TAXES
AES Indiana follows a policy of comprehensive interperiod income tax allocation. Investment tax credits related to utility property have been deferred and are being amortized over the estimated useful lives of the related property.

AES files federal and state income tax returns which consolidate IPALCO and AES Indiana. Under a tax sharing agreement with IPALCO, AES Indiana is responsible for the income taxes associated with its own taxable income and records the provision for income taxes as if AES Indiana filed separate income tax returns. AES Indiana is no longer subject to U.S. or state income tax examinations for tax years through 2016, but is open for all subsequent periods. AES Indiana made tax sharing payments to IPALCO of $0.0 million, $39.5 million and $40.8 million in 2023, 2022 and 2021, respectively.

Income Tax Provision

Federal and state income taxes charged to income are as follows:
 202320222021
 (In Thousands)
Components of income tax expense:   
Current income taxes:   
Federal$1,816 $31,286 $36,353 
State268 8,185 10,325 
Total current income taxes2,084 39,471 46,678 
Deferred income taxes:   
Federal17,631 (6,822)(7,283)
State5,951 238 (90)
Total deferred income taxes23,582 (6,584)(7,373)
Total income tax expense$25,666 $32,887 $39,305 
 
Effective and Statutory Rate Reconciliation

The provision for income taxes (including net investment tax credit adjustments) is different than the amount computed by applying the statutory tax rate to pretax income. The reasons for the difference, stated as a percentage of pretax income, are as follows:
 202320222021
Federal statutory tax rate21.0 %21.0 %21.0 %
State income tax, net of federal tax benefit3.9 %3.9 %4.0 %
Depreciation flow through and amortization(8.0)%(5.7)%(4.9)%
AFUDC - equity(0.2)%0.7 %0.3 %
Noncontrolling interests in subsidiaries5.6 %— %— %
Other – net(0.1)%0.3 %0.3 %
Effective tax rate22.2 %20.2 %20.7 %
Deferred Income Taxes

The significant items comprising AES Indiana’s net accumulated deferred tax liability recognized on the audited Consolidated Balance Sheets as of December 31, 2023 and 2022 are as follows: 
 20232022
 (In Thousands)
Deferred tax liabilities:  
Relating to utility property, net$409,675 $341,473 
Regulatory assets recoverable through future rates108,823 123,669 
Other7,975 22,717 
Total deferred tax liabilities526,473 487,859 
Deferred tax assets:  
Investment tax credit5 6 
Regulatory liabilities including ARO168,619 167,726 
Investments in tax partnerships2,483 — 
Operating loss carryforwards9,230 — 
Other3,579 15,020 
Total deferred tax assets183,916 182,752 
Deferred income tax liability – net$342,557 $305,107 
 
Uncertain Tax Positions

The following is a reconciliation of the beginning and ending amounts of unrecognized tax benefits for the years ended December 31, 2023, 2022 and 2021:
 202320222021
 (In Thousands)
Unrecognized tax benefits at January 1$— $— $7,368 
Gross decreases – prior period tax positions— — (7,368)
Unrecognized tax benefits at December 31$— $— $— 

The prior period unrecognized tax benefits represent tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. As a result of the resolution of federal and state audits in 2021, AES Indiana reviewed its uncertain positions and determined that they are more likely than not to be sustained upon examination by taxing authorities. Consequently, the uncertain tax positions were reversed; because of the impact of deferred tax accounting the reversal did not affect the annual effective tax rate but were reclassified to plant related deferred tax balances.

Tax years subsequent to 2016 remain open to examination by taxing authorities. While it is often difficult
to predict the final outcome or the timing of resolution of any particular uncertain tax position, AES Indiana believes
unrecognized tax benefits of $0 at December 31, 2023 and 2022, respectively, is the appropriate accrual for our uncertain tax positions. However, audit outcomes and the timing of audit settlements and future events that would impact AES Indiana's previously recorded unrecognized tax benefits are subject to significant uncertainty. It is possible that the ultimate outcome of future examinations may exceed AES Indiana's provision for current unrecognized tax benefits.

Tax-related interest expense and income is reported as part of the provision for federal and state income taxes. Penalties, if incurred, would also be recognized as a component of tax expense. There are no interest or penalties applicable to the periods contained in this report.