Company: KEY-PI
Filing Date: 2025-08-05
Form Type: 10-Q
Source: 0000091576-25-000110
Chunk: 129

Company: KEYCORP /NEW/
Filing Date: 2025-08-05
Form: 10-Q
Item: Item 2
Chunk 129
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 of the tax provisions enacted in 2017 as part of the Tax Cuts and Jobs Act that were set to expire at the end of 2025. In addition, the OBBBA makes changes to certain U.S. corporate tax provisions, but many are generally not effective until 2026. Key is currently evaluating the impact of the new legislation, but does not expect any material change to our ongoing tax rate or any material impact on our results of operations.Income Tax ProvisionIn accordance with the applicable accounting guidance, the principal method established for computing the provision for income taxes in interim periods requires us to make our best estimate of the effective tax rate expected to be applicable for the full year. This estimated effective tax rate is then applied to interim consolidated pre-tax operating income to determine the interim provision for income taxes.The effective tax rate, which is the provision for income taxes as a percentage of income before income taxes, was 21.4% for the second quarter of 2025 and 18.5% for the second quarter of 2024. The effective tax rates were less than our combined federal and state statutory tax rate of 24.2%, primarily due to income from investments in tax-advantaged assets such as corporate-owned life insurance, tax credits associated with low-income housing investments, and periodic adjustments to our tax reserves.Deferred TaxesAt June 30, 2025, we had a net deferred tax asset of $1.3 billion, compared to a net deferred tax asset of $1.6 billion at December 31, 2024, which are included in “accrued income and other assets” on the balance sheet. The deferred tax asset is primarily related to market fluctuations in the investment security portfolio accounted for in other comprehensive income. To determine the amount of deferred tax assets that are more likely than not to be realized, and therefore recorded, we conduct a quarterly assessment of all available evidence. This evidence includes, but is not limited to, taxable income in prior periods, projected future taxable income, and projected future reversals of deferred tax items. These assessments involve a degree of subjectivity and may undergo change. Based on these criteria, we had a valuation allowance of $15 million at June 30, 2025, and $15 million at December 31, 2024. The valuation allowance is associated with federal and state capital loss carryforwards. Unrecognized Tax BenefitsAt June 30, 2025, Key’s unrecognized tax benefits were $40 million. As permitted under