TAXES

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

TAXES

TAXES

Components of income tax expense are detailed in the following tables.

Evergy	2023		2022		2021
Current income taxes	(millions)
Federal	$	25.3	$	31.9	$	15.6
State	6.9		8.3		(0.4)
Total	32.2		40.2		15.2
Deferred income taxes
Federal	10.2		17.2		92.8
State	(21.7)		(3.4)		14.7
Total	(11.5)		13.8		107.5
Investment tax credit
Deferral	2.2		—		0.4
Amortization	(7.3)		(6.5)		(5.7)
Total	(5.1)		(6.5)		(5.3)
Income tax expense	$	15.6	$	47.5	$	117.4

Evergy Kansas Central	2023		2022		2021
Current income taxes	(millions)
Federal	$	27.8	$	95.8	$	53.3
State	4.7		3.9		(0.2)
Total	32.5		99.7		53.1
Deferred income taxes
Federal	(29.3)		(78.7)		3.8
State	(7.4)		(4.6)		(1.2)
Total	(36.7)		(83.3)		2.6
Investment tax credit
Deferral	2.2		—		0.3
Amortization	(3.9)		(4.1)		(4.3)
Total	(1.7)		(4.1)		(4.0)
Income tax expense (benefit)	$	(5.9)	$	12.3	$	51.7

Evergy Metro	2023		2022		2021
Current income taxes	(millions)
Federal	$	13.2	$	(21.9)	$	39.2
State	3.7		4.1		3.2
Total	16.9		(17.8)		42.4
Deferred income taxes
Federal	33.6		69.9		6.5
State	(7.8)		0.6		4.8
Total	25.8		70.5		11.3
Investment tax credit amortization	(3.5)		(2.4)		(1.3)
Income tax expense	$	39.2	$	50.3	$	52.4

Effective Income Tax Rates

Effective income tax rates reflected in the financial statements and the reasons for their differences from the statutory federal rates are detailed in the following tables.

Evergy	2023		2022		2021
Federal statutory income tax	21.0	%	21.0	%	21.0	%
COLI policies	(1.9)		(1.2)		(1.0)
State income taxes	(1.9)		0.3		1.0
Flow through depreciation for plant-related differences	(8.0)		(8.4)		(5.4)
Federal tax credits	(6.2)		(4.0)		(2.8)
Non-controlling interest	(0.3)		(0.3)		(0.3)
AFUDC equity	(0.3)		(0.6)		(0.6)
Amortization of federal investment tax credits	(0.7)		(0.6)		(0.4)
Valuation allowance	0.4		—		—
Stock compensation	—		(0.2)		—
Officer compensation limitation	0.3		0.3		0.5
Other	(0.4)		(0.5)		(0.4)
Effective income tax rate	2.0	%	5.8	%	11.6	%

Evergy Kansas Central	2023		2022		2021
Federal statutory income tax	21.0	%	21.0	%	21.0	%
COLI policies	(3.6)		(2.2)		(1.7)
State income taxes	(1.0)		(0.4)		(0.4)
Flow through depreciation for plant-related differences	(5.0)		(6.6)		(3.0)
Federal tax credits	(11.7)		(7.2)		(5.0)
Non-controlling interest	(0.7)		(0.6)		(0.5)
AFUDC equity	(0.4)		(0.4)		(0.6)
Amortization of federal investment tax credits	(0.6)		(0.5)		(0.5)
Valuation allowance	0.7		—		—
Stock compensation	—		(0.2)		(0.1)
Officer compensation limitation	—		0.1		0.3
Other	(0.3)		(0.2)		(0.1)
Effective income tax rate	(1.6)	%	2.8	%	9.4	%

Evergy Metro	2023		2022		2021
Federal statutory income tax	21.0	%	21.0	%	21.0	%
COLI policies	(0.1)		(0.1)		(0.2)
State income taxes	(0.9)		0.9		1.7
Flow through depreciation for plant-related differences	(7.6)		(7.2)		(7.8)
Federal tax credits	(0.7)		(0.1)		(0.2)
AFUDC equity	(0.3)		(0.7)		(0.7)
Amortization of federal investment tax credits	(0.9)		(0.6)		(0.4)
Stock compensation	0.1		(0.2)		—
Officer compensation limitation	0.5		0.5		0.9
Other	(0.5)		(1.1)		0.1
Effective income tax rate	10.6	%	12.4	%	14.4	%

Deferred Income Taxes

The tax effects of major temporary differences resulting in deferred income tax assets (liabilities) in the consolidated balance sheets is in the following table.

	December 31
	2023						2022
	Evergy		Evergy Kansas Central		Evergy Metro		Evergy		Evergy Kansas Central		Evergy Metro
Deferred tax assets:	(millions)
Tax credit carryforward	$	288.9	$	242.7	$	43.6	$	311.0	$	226.9	$	77.6
Income taxes refundable to customers, net	289.4		149.1		103.6		311.0		156.5		113.6
Deferred employee benefit costs	101.5		52.1		58.2		86.2		45.1		54.7
Net operating loss carryforward	22.5		—		—		31.7		—		—
Deferred state income taxes	141.0		99.2		36.2		145.6		99.8		38.6
Accrued liabilities	185.9		85.9		66.8		169.7		77.5		61.6
Other regulatory liabilities	132.0		86.4		17.1		116.4		43.7		30.6
Other	121.7		64.2		25.1		131.7		69.0		28.2
Total deferred tax assets before   valuation allowance	1,282.9		779.6		350.6		1,303.3		718.5		404.9
Valuation allowances	(14.8)		(2.7)		—		(12.8)		—		—
Total deferred tax assets, net	1,268.1		776.9		350.6		1,290.5		718.5		404.9
Deferred tax liabilities:
Plant-related	(2,818.4)		(1,397.1)		(1,030.2)		(2,770.9)		(1,333.2)		(1,016.4)
Deferred employee benefit costs	(11.1)		(10.6)		—		(8.8)		(8.3)		—
ARO regulatory assets	(159.1)		(67.2)		(60.3)		(144.3)		(59.4)		(54.3)
Acquisition premium	(37.4)		(37.4)		—		(40.6)		(40.6)		—
Other regulatory assets	(231.3)		(43.6)		(34.1)		(195.6)		(41.7)		(28.6)
Other	(108.7)		(65.2)		(23.2)		(126.9)		(79.8)		(26.5)
Total deferred tax liabilities	(3,366.0)		(1,621.1)		(1,147.8)		(3,287.1)		(1,563.0)		(1,125.8)
Net deferred income tax liabilities	$	(2,097.9)	$	(844.2)	$	(797.2)	$	(1,996.6)	$	(844.5)	$	(720.9)

Tax Credit Carryforwards

As of December 31, 2023 and 2022, Evergy had $284.1 million and $311.0 million, respectively, of federal general business income tax credit carryforwards.  As of December 31, 2023 and 2022, Evergy Kansas Central had $237.9 million and $226.9 million, respectively, of federal general business income tax credit carryforwards. As of December 31, 2023 and 2022, Evergy Metro had $43.6 million and $77.6 million, respectively, of federal general business income tax credit carryforwards.  The carryforwards for Evergy, Evergy Kansas Central and Evergy Metro relate primarily to wind production tax credits and research and development tax credits and expire in the years 2024 to 2043. Approximately $0.1 million of Evergy's credits are related to Low Income Housing credits that were acquired in Great Plains Energy's acquisition of Evergy Missouri West.

The year of origin of Evergy's, Evergy Kansas Central's and Evergy Metro's related tax benefit amounts for federal tax credit carryforwards as of December 31, 2023 are detailed in the following table.

	Amount of Benefit
Year of Origin	Evergy		Evergy Kansas Central		Evergy Metro
	(millions)
2007	0.1		—		—
2016	8.5		3.2		4.6
2017	44.0		34.9		8.4
2018	43.9		36.3		7.5
2019	37.7		30.9		6.7
2020	35.9		28.4		7.4
2021	31.9		28.1		3.7
2022	34.8		31.7		2.6
2023	47.3		44.4		2.7
	$	284.1	$	237.9	$	43.6

As of December 31, 2023, Evergy had $4.8 million of tax benefits related to state income tax credit carryforwards. As of December 31, 2023, Evergy Kansas Central had $4.8 million of tax benefits related to state income tax credit carryforwards. The state income tax credits relate primarily to the Kansas high performance incentive program tax credits and expire in the years 2038 to 2039. Due to the elimination of the Kansas corporate income tax for utilities, Evergy and Evergy Kansas Central expect a portion of these state NOL carryforwards to expire unutilized and have provided a valuation allowance against $2.7 million of the state tax benefits.

Net Operating Loss Carryforwards

As of December 31, 2023 and 2022, Evergy had $17.2 million and $25.4 million, respectively, of tax benefits related to federal net operating loss (NOL) carryforwards.  Approximately $7.1 million of Evergy's tax benefits as of December 31, 2023 are related to NOLs that were acquired in the Evergy Missouri West acquisition. Due to federal limitations on the utilization of income tax attributes acquired in the Evergy Missouri West acquisition, Evergy expects a portion of these federal NOL carryforwards to expire unutilized and has provided a valuation allowance against $7.1 million of the federal income tax benefit. The federal NOL carryforwards expire in 2024.  

The year of origin of Evergy's related tax benefit amounts for federal NOL carryforwards as of December 31, 2023 are detailed in the following table.

Year of Origin	Amount of Benefit
	(millions)
2006	$	17.2

In addition, Evergy also had deferred tax benefits of $5.3 million and $6.3 million related to state NOLs as of December 31, 2023 and 2022, respectively.  The state NOL carryforwards expire in years 2024 to 2041. Evergy does not expect to utilize $5.0 million of NOLs before the expiration date of the carryforwards of NOLs in certain states. Therefore, a valuation allowance has been provided against $5.0 million of state tax benefits.

Valuation Allowances

Evergy is required to assess the ultimate realization of deferred tax assets using a "more likely than not" assessment threshold.  This assessment takes into consideration tax planning strategies within Evergy's control.  As a result of this assessment, Evergy has established a partial valuation allowance for federal and state tax NOL carryforwards and tax credit carryforwards. During 2023, Evergy recorded $2.0 million of tax expense in continuing operations primarily related to state tax credits.

Uncertain Tax Positions

Evergy is considered open to U.S. federal examination for years after 2009 due to the carryforward of net operating losses and general business income tax credits. With few exceptions, Evergy is no longer subject to state and local tax examinations by tax authorities for years before 2018. As of December 31, 2023, Evergy does not have any significant income tax issues under examination.

Inflation Reduction Act (IRA)

In 2022, the IRA was signed into law, providing a production tax credit (PTC) for electricity produced by existing nuclear power plants. The Evergy Companies are still evaluating the IRA, pending the issuance of additional guidance, and its impact to the Evergy Companies' consolidated financial results.