Income Taxes

9 Months Ended

Sep. 30, 2024

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

IPALCO’s provision for income taxes is based on the estimated annual effective tax rate, plus discrete items. The effective combined state and federal income tax rates were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Effective tax rate	13.3	%	9.7	%	21.7	%	12.2	%

The year-to-date rate is different from the combined federal and state statutory rate of 24.9% primarily due to the impact of taxes on noncontrolling interest in subsidiaries and the net tax expense related to the amortization of allowance for equity funds used during construction, which is partially offset by the flowthrough of the net tax benefit related to the reversal of excess deferred taxes of AES Indiana.

IPALCO’s income tax expense for the nine months ended September 30, 2024, was calculated using the estimated annual effective income tax rate for 2024 of 17.3% on ordinary income. Management estimates the annual effective tax rate based on its forecast of annual pre-tax income or loss.

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 using a separate return method.