Annual report pursuant to Section 13 and 15(d)

INCOME TAXES

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INCOME TAXES
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The following is a summary of the provision for income taxes.
  Year Ended December 31,
(dollar amounts in millions) 2024 2023 2022
Current tax provision
Federal $ 411  $ 644  $ 129 
State 43  63  62 
Foreign 15  8  5 
Total current tax provision 469  715  196 
Deferred tax (benefit) provision
Federal (24) (291) 319 
State (2) (11) — 
Total deferred tax (benefit) provision (26) (302) 319 
Provision for income taxes $ 443  $ 413  $ 515 
The following is a reconciliation of the provision for income taxes.
 
Year Ended December 31,
(dollar amounts in millions) 2024 2023 2022
Provision for income taxes computed at the statutory rate $ 505  $ 501  $ 580 
Increases (decreases):
General business credits (271) (253) (164)
Tax-exempt income (29) (28) (21)
Capital loss —  —  (60)
Affordable housing investment amortization, net of tax benefits 193  148  129 
State income taxes, net 32  41  49 
Other 13  4  2 
Provision for income taxes $ 443  $ 413  $ 515 
The significant components of deferred tax assets and liabilities were as follows.
  At December 31,
(dollar amounts in millions) 2024 2023
Deferred tax assets:
Fair value adjustments $ 848  $ 791 
Allowances for credit losses 559  564 
Tax credit carryforward 452  240 
Research and development expenses 108  91 
Net operating and other loss carryforward 90  101 
Lease liability 88  89 
Pension and other employee benefits 73  70 
Accrued expense/prepaid 41  61 
Purchase accounting and other intangibles 5  82 
Other assets 4  4 
Total deferred tax assets 2,268  2,093 
Deferred tax liabilities:
Lease financing 968  873 
Loan origination costs 162  155 
Mortgage servicing rights 116  124 
Operating assets 78  96 
Right-of-use asset 64  62 
Securities adjustments 48  40 
Other liabilities 3  3 
Total deferred tax liabilities 1,439  1,353 
Net deferred tax asset before valuation allowance
 829  740 
Valuation allowance (36) (30)
Net deferred tax asset $ 793  $ 710 
At December 31, 2024, Huntington’s net deferred tax asset related to loss and other carryforwards was $542 million. This was comprised of federal net operating loss carryforwards of $36 million, which will begin expiring in 2030, state net operating loss carryforwards of $41 million, which will begin expiring in 2025, a federal capital loss carryforward of $10 million, which will begin expiring in 2025, state capital loss carryforwards of $3 million, which will begin expiring in 2025, general business credits of $449 million, which will begin expiring in 2042, and a corporate alternative minimum tax carryover of $3 million, which may be carried forward indefinitely.
The valuation allowance for deferred tax assets as of December 31, 2024 was $36 million, which included a federal valuation allowance of $7 million and a state valuation allowance of $29 million.
The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state, city, and foreign jurisdictions. Federal income tax audits have been completed for tax years through 2019. The 2020-2023 tax years remain open under the statute of limitations. Also, with few exceptions, the Company is no longer subject to state, city, or foreign income tax examinations for tax years before 2020.
The following table provides a reconciliation of the beginning and ending amounts of gross unrecognized tax benefits.
Year Ended December 31,
(dollar amounts in millions) 2024 2023
Unrecognized tax benefits at beginning of year $ 8  $ 94 
Gross increases for tax positions taken during prior years 7  8 
Gross decreases for tax positions taken during prior years (2) — 
Gross increases for tax positions taken during current year 6  — 
Settlements with taxing authorities —  (94)
Unrecognized tax benefits at end of year $ 19  $ 8 
Due to the complexities of some of these uncertainties, the ultimate resolution may result in a liability that is materially different from the current estimate of the tax liabilities.
Any interest and penalties on income tax assessments or income tax refunds are recognized in the Consolidated Statements of Income as a component of provision for income taxes. The amounts of accrued tax-related interest and penalties were immaterial at December 31, 2024 and 2023. Further, the amount of net interest and penalties related to unrecognized tax benefits was immaterial for all periods presented. All of the gross unrecognized tax benefits would impact the Company’s effective tax rate if recognized.
At December 31, 2024, retained earnings included approximately $182 million of base year reserves of acquired thrift institutions, for which no deferred federal income tax liability has been recognized. Under current law, if these bad debt reserves are used for purposes other than to absorb bad debt losses, they will be subject to federal income tax at the corporate rate enacted at the time. The amount of unrecognized deferred tax liability relating to the cumulative bad debt deduction was approximately $38 million at December 31, 2024.