Company: EAI
Filing Date: 2025-02-18
Form Type: 10-K
Source: 0000065984-25-000012
Chunk: 561

Company: ENTERGY ARKANSAS, LLC
Filing Date: 2025-02-18
Form: 10-K
Item: Item 7
Chunk 561
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 tax return, Entergy Arkansas, Entergy Louisiana, and System Energy will be required to reassess the determination of the availability of such credits based on any other additional information or regulatory requests.  If credits are recognized in future periods, the value of such credits is expected to be provided to customers.  As such, recognition of nuclear production tax credits is not expected to have a material effect on the results of operations of Entergy, Entergy Arkansas, Entergy Louisiana, or System Energy.Tax Accounting MethodsCertain Entergy subsidiaries have elected to apply the mark-to-market method of accounting for income tax return purposes to wholesale power purchase agreements as appropriate under the Internal Revenue Code and U.S. Treasury Regulations.  The mark-to-market tax gain or loss computed each year is based on an estimated fair market valuation which includes analyses of market prices and conditions.In 2020, Entergy Texas elected mark-to-market income tax treatment for wholesale electric power purchase and sale agreements which resulted in a $2.5 billion deductible temporary difference.Arkansas and Louisiana Corporate Income Tax Rate ChangesSince 2019, the State of Arkansas has enacted corporate income tax law changes that have phased in rate reductions from the former rate of 6.5% to the currently enacted rate of 4.3%.  As a result of the rate reductions, Entergy Arkansas has recorded regulatory liabilities for income taxes of approximately $29 million, $26 million, and $15 million in 2024, 2023, and 2022, respectively, and a total of $32 million for years prior to 2022.  The 

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Table of ContentsEntergy Corporation and SubsidiariesNotes to Financial Statements

regulatory liabilities include a tax gross-up related to the treatment of income taxes in the retail and wholesale ratemaking formulas and have been or are scheduled to be included in future rate mechanisms.In November 2024, during the Louisiana Third Special Legislative Session of 2024, the Louisiana legislature enacted comprehensive tax reform measures that impact corporate income taxes through a reduction in rates to a flat 5.5% (from the current highest marginal rate of 7.5%), effective January 1, 2025.  Accordingly, deferred tax assets and liabilities were adjusted, with associated regulatory assets and liabilities for income taxes, to reflect the new applicable state rate.  As a result of the rate reduction, Entergy Louisiana and Entergy New Orleans recorded regulatory liabilities for income taxes of approximately $179 million and $9