The following table reconciles the effective income tax rate to the U.S. federal statutory tax rate:


										2022			2021
	Year Ended December 31,									vs.			vs.
	2022			2021			2020			2021			2020
Statutory U.S. Federal Income Tax Rate		21.0	%		21.0	%		21.0	%		—			—
Income Passed Through to Non-Controlling Interest Holders		-8.1	%		-10.2	%		-10.1	%		2.1	%		-0.1	%
State and Local Income Taxes		6.0	%		2.1	%		2.4	%		3.9	%		-0.3	%
Change to a Taxable Corporation		—			—			1.4	%		—			-1.4	%
Change in Valuation Allowance		—			-4.1	%		-2.8	%		4.1	%		-1.3	%
Basis Adjustment (a)		-4.6	%		—			—			-4.6	%		—
Other		-0.6	%		-0.1	%		1.7	%		-0.5	%		-1.8	%

Effective Income Tax Rate		13.7	%		8.7	%		13.6	%		5.0	%		-4.9	%

(a)	Represents the impact of the out-of-period adjustment made during the year ended December 31, 2022 to revise the book investment basis used to calculate deferred tax assets and the deferred tax provision.

Blackstone’s effective tax rate for the year ended December 31, 2022 was impacted by recent increases in Blackstone’s state tax provisions for the jurisdictions in which it operates and larger benefits recorded in December 31, 2021 for valuation allowance releases.

During the year ended December 31, 2022, Blackstone recorded an out-of-period adjustment to revise the book investment basis used to calculate deferred tax assets and the deferred tax provision. The cumulative impact of the correction related to prior years resulted in a decrease of $158.2 million in the Provision for Taxes for the year ended December 31, 2022 and a corresponding increase to Deferred Tax Assets as of December 31, 2022. The impact of the out-of-period adjustment on the effective income tax rate is reflected in the Basis Adjustment row in the effective income tax rate table above. Blackstone concluded the out-of-period adjustment was not material to the current or prior periods.

Deferred income taxes reflect the net tax effects of temporary differences that may exist between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes using enacted tax rates in effect for the year in which the differences are expected to reverse. A summary of the tax effects of the temporary differences is as follows:


	December 31,
	2022		2021
Deferred Tax Assets
Investment Basis Differences/Net Unrealized Gains and Losses	$	2,031,002	$	1,572,672
Other		31,720		8,965

Total Deferred Tax Assets		2,062,722		1,581,637

Deferred Tax Liabilities
Investment Basis Differences/Net Unrealized Gains and Losses		15,409		15,421
Other		31,498		16,439

Total Deferred Tax Liabilities		46,907		31,860

Net Deferred Tax Assets	$	2,015,815	$	1,549,777

The net increase in the deferred tax asset for the year ended December 31, 2022, compared to the year ended December 31, 2021, is primarily due to (a) recognition of additional tax basis in certain assets and recording corresponding deferred tax benefits related to quarterly exchanges of Blackstone Holdings Partnership units for common shares of Blackstone Inc., and (b) an out-of-period adjustment that Blackstone recorded to revise the book investment basis used to calculate deferred tax assets and the deferred tax provision. The adjustment was not material to the current or prior periods and reflects the cumulative impact of the correction, which generated an additional deferred tax asset for the year ended December 31, 2022. Realization of deferred tax assets depends on the expectation and character of future taxable income. In addition, Blackstone

has no significant net operating losses carryforward at December 31, 2022.

In evaluating the ability to realize deferred tax assets, Blackstone among other things, considers projections of taxable income (including character of such income), beginning with historic results and incorporating assumptions of the amount of future pretax operating income. These assumptions about future taxable income require significant judgment and are consistent with the plans and estimates that Blackstone uses to manage its business. To the extent any portion of the deferred tax assets are not considered to be more likely than not to be realized, valuation allowances are recorded.

Currently, Blackstone does not believe it meets the indefinite reversal criteria that would preclude Blackstone from recognizing a deferred tax liability with respect to its foreign subsidiaries. Therefore, if applicable Blackstone recorded a deferred tax liability for any outside basis difference of an investment in a foreign subsidiary.

Blackstone files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, Blackstone is subject to examination by federal and certain state, local and foreign tax authorities. As of December 31, 2022, the most material jurisdictions where Blackstone entities are under active examination are New York State and City. The following are the major filing jurisdictions and their respective earliest open period subject to examination:


Jurisdiction	Year
Federal		2019
New York City		2009
New York State		2016
United Kingdom		2011

Blackstone’s unrecognized tax benefits, excluding related interest and penalties, were:


	December 31,
	2022		2021		2020
Unrecognized Tax Benefits — January 1	$	47,501	$	32,933	$	24,958
Additions for Tax Positions of Prior Years		106,059		14,557		7,959
Exchange Rate Fluctuations		64		11		16

Unrecognized Tax Benefits — December 31	$	153,624	$	47,501	$	32,933

If recognized, the above tax benefits of $153.6 million and $47.5 million for the years ended December 31, 2022 and 2021, respectively, would reduce the annual effective rate. It is reasonably possible that significant changes in the balance of unrecognized tax benefits may occur during the twelve months subsequent to December 31, 2022. However, at this time, it is not possible to estimate the expected change to the total Unrecognized Tax Benefits and its impact on Blackstone’s effective tax rate.

The unrecognized tax benefits are recorded in Accounts Payable, Accrued Expenses and Other Liabilities in the Consolidated Statements of Financial Condition.

During the years ended December 31, 2022, 2021 and 2020, Blackstone accrued no penalties and accrued interest expense related to unrecognized tax benefits of $32.6 million, $1.5 million and $1.3 million, respectively.

Other Income — Change in Tax Receivable Agreement Liability

In 2022 and 2021, the $22.3 million and $(2.8) million, respectively, Change in Tax Receivable Agreement Liability was primarily attributable to a change in our state tax apportionment.