Income taxes

9 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

Income taxes

Income taxes

BNY Mellon recorded an income tax provision of $242 million (38.4% effective tax rate) in the third quarter of 2022, which includes approximately 19% impact due to the goodwill impairment. The income tax provision was $219 million (18.8% effective tax rate) in the third quarter of 2021 and $231 million (21.1% effective tax rate) in the second quarter of 2022.

Our total tax reserves as of Sept. 30, 2022 were $130 million compared with $138 million at Dec. 31, 2021. If these tax reserves were unnecessary, $130 million would affect the effective tax rate in future periods. We recognize accrued interest and penalties, if applicable, related to income taxes in income tax expense. Included in the balance sheet at Sept. 30,

2022 is accrued interest, where applicable, of $38 million. The additional tax expense related to interest for the nine months ended Sept. 30, 2022 was $3 million, compared with $6 million for the nine months ended Sept. 30, 2021.

It is reasonably possible the total reserve for uncertain tax positions could decrease within the next 12 months by approximately $12 million as a result of adjustments related to tax years that are still subject to examination.

Our federal income tax returns are closed to examination through 2016. Our New York State income tax returns are closed to examination through 2014. Our New York City income tax returns are closed to examination through 2012. Our UK income tax returns are closed to examination through 2019.