INCOME TAXES

9 Months Ended

Sep. 30, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The provision for income taxes differs from the amount of income tax determined by applying the applicable United States statutory federal income tax rate to income before income taxes as a result of the following:

	Three Months Ended September 30, 2021				Three Months Ended September 30, 2020
(in millions)	Amount		Effective Tax Rate		Amount		Effective Tax Rate
Statutory federal income tax	$	17.3	21.0	%	$	20.1	21.0	%
State income taxes net of federal tax benefit	5.1		6.2	%	5.9		6.2	%
Federal excess deferred tax amortization – Wisconsin unprotected	(9.8)		(11.9)	%	(4.3)		(4.5)	%
Federal excess deferred tax amortization	(1.6)		(1.9)	%	(1.8)		(1.9)	%
Other	(0.6)		(0.8)	%	(0.3)		(0.4)	%
Total income tax expense	$	10.4	12.6	%	$	19.6	20.4	%

	Nine Months Ended September 30, 2021				Nine Months Ended September 30, 2020
(in millions)	Amount		Effective Tax Rate		Amount		Effective Tax Rate
Statutory federal income tax	$	48.1	21.0	%	$	50.5	21.0	%
State income taxes net of federal tax benefit	14.3		6.2	%	14.7		6.1	%
Federal excess deferred tax amortization – Wisconsin unprotected	(28.7)		(12.5)	%	(11.0)		(4.6)	%
Federal excess deferred tax amortization	(4.5)		(2.0)	%	(4.5)		(1.9)	%
Other	(1.6)		(0.6)	%	(1.3)		(0.5)	%
Total income tax expense	$	27.6	12.1	%	$	48.4	20.1	%

The effective tax rates of 12.6% and 12.1% for the three and nine months ended September 30, 2021, respectively, differ from the United States statutory federal income tax rate of 21%, primarily due to the recognition of certain unprotected deferred tax benefits created as a result of the Tax Legislation. In accordance with the rate order received from the PSCW in December 2019, we are amortizing the unprotected deferred tax benefits over periods ranging from two years to four years, to reduce near-term rate impacts to our customers. In addition, as discussed in more detail below, the impact of the protected benefits associated with the Tax Legislation drove a decrease in the effective tax rate. These items were partially offset by state income taxes.

The effective tax rates of 20.4% and 20.1% for the three and nine months ended September 30, 2020, respectively, differ from the United States statutory federal income tax rate of 21%, primarily due to the recognition of certain unprotected deferred tax benefits created as a result of the Tax Legislation. In addition, as discussed in more detail below, the impact of the protected benefits associated with the Tax Legislation drove a decrease in the effective tax rate. These items were partially offset by state income taxes.

The Tax Legislation required us to remeasure the deferred income taxes at our utility segment and we began to amortize the resulting excess protected deferred income taxes beginning in 2018 in accordance with normalization requirements (see federal excess deferred tax amortization line above).

See Note 19, Regulatory Environment, for more information on unprotected tax benefits.