Company: FMCCN
Filing Date: 2025-02-13
Form Type: 10-K
Source: 0001026214-25-000040
Chunk: 281

Company: FEDERAL HOME LOAN MORTGAGE CORP
Filing Date: 2025-02-13
Form: 10-K
Item: Item 15
Chunk 281
---
 tax asset or liability balance during the year, including any change in the valuation allowance.

The table below presents the components of our federal income tax expense for the past three years. We are exempt from state and local income taxes.Table 13.1 - Federal Income Tax ExpenseYear Ended December 31,(In millions)202420232022Current income tax expense($3,862)($1,003)($1,749)Deferred income tax expense942 (1,658)(528)Total income tax expense($2,920)($2,661)($2,277)Income tax expense increased from both 2023 to 2024 and 2022 to 2023 primarily due to an increase in pre-tax book income.

The table below presents the reconciliation between our federal statutory income tax rate and our effective tax rate for the past three years.Table 13.2 - Reconciliation of Federal Statutory Income Tax Rate to Effective Tax RateYear Ended December 31,202420232022(Dollars in millions)AmountPercentAmountPercentAmountPercentStatutory corporate tax rate($3,103)21.0 %($2,772)21.0 %($2,437)21.0 %Tax-exempt interest8 (0.1)10 (0.1)7 (0.1)Tax credits340 (2.3)242 (1.8)190 (1.6)Valuation allowance— — 16 (0.1)18 (0.2)Proportional amortization of LIHTC investments(253)1.7 (184)1.4 (143)1.2 Other88 (0.5)27 (0.2)88 (0.7)Effective tax rate($2,920)19.8 %($2,661)20.2 %($2,277)19.6 %

Deferred Tax Assets, NetWe use the asset and liability method of accounting for income taxes for financial reporting purposes. Under this method, deferred tax assets and liabilities are recognized based upon the expected future tax consequences of existing temporary differences between the financial reporting and the tax reporting basis of assets and liabilities using enacted statutory tax rates as well as tax net operating loss and tax credit carryforwards, if any. To the extent tax laws change, deferred tax assets and liabilities are adjusted in the period that the tax change is enacted. The realization of our