The simple version

A rate like this is one number measured against another. The first is what a company owes for the period. The second is what it earned before that came out.

Most costs shrink both at once. They lower what a company earned, and because they do, they also lower what it owes.

A few costs shrink only the second one. The published rate then climbs even though nothing about how the company is charged has changed, and the full face amount lands on what is left.

The numbers

• The release is headed with net income of $6.9 billion and diluted earnings per share of $0.91 for the third quarter of 2026 (Bank of America, Form 8-K Exhibit 99.1, filed October 14, 2026)
• It states that results include a regulatory settlement charge of $1.2 billion, or $0.17 per share (same release, headline)
• It states adjusted net income of $8.1 billion and adjusted earnings per share of $1.08, and notes that the adjusted measures are non-GAAP financial measures (same release, headline and footnote 2)
• Pretax income is shown as $9.0 billion as reported, with the $1.2 billion charge removed to give $10.2 billion adjusted, against $10.4 billion a year earlier (same release, Financial Highlights table)
• Total revenue, net of interest expense, was $30.0 billion against $29.0 billion a year earlier, and noninterest expense was $19.7 billion as reported and $18.5 billion adjusted against $17.3 billion a year earlier (same table)
• The effective tax rate for the quarter was approximately 23 percent, and excluding the non-tax-deductible regulatory settlement charge the adjusted rate was approximately 20 percent (same release)
• The release's reconciliation table shows the charge moving pretax income by 1.2 billion and net income by 1.2 billion, and its footnote calculates the effective tax rate as income tax expense of $2.0 billion divided by pretax income (same release, reconciliation of non-GAAP measures)
• The release states that amounts may not total due to rounding (same release, headline note)

Why the published rate climbed with nothing changing

The company published both versions of the rate itself. What separates them is arithmetic, and it follows from a charge the release describes as leaving what was owed untouched.

Hold the amount owed still and shrink the income it is measured against, and the published rate has to climb. That is the entire mechanism.

Which is why a single headline rate is a weak summary of how a company is actually charged. A figure near the normal level can be the product of items that offset each other, and a figure above it can be the product of one cost that brought nothing back.

The actual math on 9.0 and 10.2

Take the two views side by side. As reported the company earned 9.0 billion before tax, and with the charge removed it earned 10.2 billion.

The release puts the tax for the quarter at 2.0 billion. Measured against 9.0 that is about 22 percent, and against 10.2 about 20 percent, our arithmetic on the release's one-decimal amounts, which is why the first lands just under the company's stated 23.

The fingerprint is in the company's own reconciliation table. Removing the charge moves income before tax by 1.2 billion and moves income after tax by the same 1.2 billion.

For an ordinary cost the second move would have been smaller, because part of the cost would have come back as a lower tax bill. Here the two moves are equal, so the tax line did not move at all.

That is what it looks like when nothing comes back. The charge cost its full face amount.

What this means

The practical use is a quick check on any single large charge. If the two income figures differ by exactly the face amount of the item, nothing came back on the amount owed.

If they differ by less, something did, and the true cost of the item is smaller than its headline. That alone tells you which of the two you are looking at.

That matters most when weighing costs of similar size against each other. A charge that brings nothing back lands at full weight, so setting it beside an ordinary cost of the same face amount understates it.

What this is NOT

This article explains what an effective tax rate is and why a single charge can move it, using Bank of America's third quarter 2026 earnings release filed as Exhibit 99.1 to a Form 8-K on October 14, 2026 and read that day. It is not a view on that company, its stock, or its management, and it is not a recommendation to buy, sell, or hold anything. It is not tax advice, and it states no general rule about what is or is not deductible for any company or any person: the only characterisation relied on is the company's own description of this particular charge in this particular release. It does not describe the matter that gave rise to that settlement charge, which this article does not examine and takes no position on. The two divisions in the actual math section are ours, run on figures the release rounds to one decimal place and warns may not total, so they approximate the company's stated rates rather than replacing them; the equal 1.2 billion moves in pretax and net income, and the 2.0 billion tax figure, are the release's own. Adjusted net income, adjusted earnings per share and the adjusted rate are non-GAAP measures, as the release itself notes. It is not a forecast of the company's future rate, income, or costs. It is not personalized financial advice of any kind. This is not a political endorsement or criticism of anyone.

Sources

• Bank of America Corporation, Form 8-K Exhibit 99.1, third quarter 2026 earnings release, filed and accepted October 14, 2026, read October 14, 2026
• Bank of America Corporation, Form 8-K filing index for accession 0000070858-26-000481, period of report October 14, 2026, read October 14, 2026