Company: SREA
Filing Date: 2025-11-05
Form Type: 10-Q
Source: 0001032208-25-000065
Chunk: 185

Company: SEMPRA
Filing Date: 2025-11-05
Form: 10-Q
Item: Item 2
Chunk 185
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 132 443 426 Pretax income$293 $332 $1,552 $1,639 Effective income tax rate165 %(32)%46 %(4)%

(1)    We discuss how we recognize equity earnings in Note 5 of the Notes to Consolidated Financial Statements in the Annual Report.

We report as part of our pretax results the income or loss attributable to NCI. However, we do not record income taxes for a portion of this income or loss, as some of our entities with NCI are currently treated as partnerships for U.S. income tax purposes, and thus we are only liable for income taxes on the portion of the earnings that are allocated to us. Our pretax income, however, includes 100% of these entities. If our entities with NCI grow, and if we continue to invest in such entities, the impact on our ETR may become more significant.

106

In the three months ended September 30, 2025 compared to the same period in 2024, Sempra had an income tax expense in 2025 compared to an income tax benefit in 2024 primarily due to:

▪$514 million net income tax expense in 2025 as a result of management’s decision to classify SI Partners as held for sale, comprised of the following:

◦$705 million income tax expense to adjust deferred income tax liabilities primarily related to outside basis differences in our investment in SI Partners 

◦$153 million income tax expense for changes in state income tax apportionment

Offset by:

◦$344 million income tax benefit from changes to a valuation allowance against certain tax credit carryforwards 

▪$123 million from $45 million income tax expense in 2025 compared to $78 million income tax benefit in 2024 from foreign currency and inflation effects on our monetary positions in Mexico

▪$78 million income tax expense in 2025 from changes to a valuation allowance against foreign tax credits that were carried forward from the implementation of the TCJA

▪$30 million income tax benefit in 2024 from an outside basis difference in a domestic partnership investment

Offset by:

▪higher income tax benefit from flow-through items, including $73 million income tax benefit in 2025 from the election to accelerate self-developed software deductions, which we discuss in Note 1 of the Notes to Condensed Consolidated Financial Statements 

▪higher income tax benefit in 2025 from higher ITCs