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Income Tax
 6 Months Ended
Jun. 30, 2021
Income Tax Disclosure [Abstract]  
Income Tax Income Tax
Con Edison’s income tax expense decreased to an $11 million income tax benefit for the three months ended June 30, 2021 from $9 million of income tax expense for the three months ended June 30, 2020. The decrease in income tax expense is primarily due to lower income before income tax expense, lower state income taxes, lower allowance for uncollectible accounts and an increase in the amortization of excess deferred federal income taxes due to the TCJA, offset in part by higher income attributable to the company from non-controlling interests.

CECONY’s income tax expense decreased to a $16 million income tax benefit for the three months ended June 30, 2021 from $7 million in income tax expense for the three months ended June 30, 2020. The decrease in income tax expense is primarily due to lower income before income tax expense, lower state income taxes, lower allowance for uncollectible accounts, higher settlement payments related to injuries and damages and an increase in the amortization of excess deferred federal income taxes due to the TCJA.

Reconciliation of the difference between income tax expense and the amount computed by applying the prevailing statutory income tax rate to income before income taxes for the three months ended June 30, 2021 and 2020 is as follows:
Con EdisonCECONY
(% of Pre-tax income)2021202020212020
STATUTORY TAX RATE
Federal21 %21 %21 %21 %
Changes in computed taxes resulting from:
State income tax, net of federal income tax benefit5 6 5 6 
Amortization of excess deferred federal income taxes(41)(20)(38)(25)
Taxes attributable to non-controlling interests14 (2)— — 
Cost of removal5 4 5 5 
Other plant-related items(3)(3)(3)(4)
Renewable energy credits(8)(4)— — 
Allowance for uncollectible accounts(1)1 (1)1 
Injuries and damages reserve
(2)— (2)— 
Other— 1 (1)— 
Effective tax rate(10)%4 %(14)%4 %

Con Edison’s income tax expense increased to $68 million for the six months ended June 30, 2021 from $64 million for the six months ended June 30, 2020. The increase in income tax expense is primarily due to higher income attributable to the company from non-controlling interests, offset in part by lower income before income tax expense, lower state income taxes and an increase in the amortization of excess deferred federal income taxes due to the TCJA.

CECONY’s income tax expense decreased to $98 million for the six months ended June 30, 2021 from $102 million for the six months ended June 30, 2020. The decrease in income tax expense is primarily due to an increase in the amortization of excess deferred federal income taxes due to the TCJA, lower allowance for uncollectible accounts, higher settlement payments related to injuries and damages, offset in part by higher income before income tax expense and higher plant related items.

Reconciliation of the difference between income tax expense and the amount computed by applying the prevailing
statutory income tax rate to income before income taxes for the six months ended June 30, 2021 and 2020 is as
follows:

Con EdisonCECONY
(% of Pre-tax income)2021202020212020
STATUTORY TAX RATE
Federal21 %21 %21 %21 %
Changes in computed taxes resulting from:
State income tax, net of federal income tax benefit4 5 5 5 
Amortization of excess deferred federal income taxes(14)(12)(13)(12)
Taxes attributable to non-controlling interests2 (1)— — 
Cost of removal2 2 2 2 
Other plant-related items(1)(2)(1)(2)
Renewable energy credits(3)(3)— — 
CARES Act NOL carryback— (1)— — 
Other— 1 — 1 
Effective tax rate11 %10 %14 %15 %
In response to the economic impacts of the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law on March 27, 2020. The CARES Act provides relief to corporate taxpayers by permitting a five-year carryback of net operating losses (NOLs) for tax years 2018, 2019 and 2020, temporarily removing the 80 percent limitation when applying the NOLs to carryback years, increasing the 30 percent limitation on interest deductibility to 50 percent of adjusted taxable income for tax years 2019 and 2020, and provides for certain employee retention tax credits and refunds for eligible employers.

Under the CARES Act, Con Edison carried back its $29 million NOL from tax year 2018 to tax year 2013 generating a $2.5 million net tax refund for which a tax receivable was established in 2020. In addition, Con Edison recognized a discrete income tax benefit of $4 million in 2020, due to the higher federal statutory tax rate in 2013. The 2018 federal NOL was recorded at 21 percent and will be carried back to tax year 2013, which had a 35 percent federal statutory tax rate. This tax benefit was primarily recognized at the Clean Energy Businesses.

Pursuant to CECONY’s electric rate plan that went into effect in January 2020, the deferral of its net benefits for its electric service ceased and is included in rates. Additionally, the unprotected excess deferred federal income taxes for its electric and gas services is being amortized over a five-year period, which decreased the income tax expense for the six months ended June 30, 2021 and 2020. See “Other Regulatory Matters” in Note B.

In April 2021, New York State passed a law that increased the corporate franchise tax rate on business income from 6.5% to 7.25%, retroactive to January 1, 2021, for taxpayers with taxable income greater than $5 million. The law also reinstated the business capital tax at 0.1875%, not to exceed an annual maximum tax liability of $5 million per taxpayer. New York State requires a corporate franchise taxpayer to calculate and pay the highest amount of tax under the three alternative methods: a tax on business income; a tax on business capital; or a fixed dollar minimum. The provisions to increase the corporate franchise tax rate and reinstate a business capital tax are scheduled to expire after 2023 and are not expected to have a material impact on the Companies’ financial position, results of operations or liquidity.

Uncertain Tax Positions
At June 30, 2021, the estimated liability for uncertain tax positions for Con Edison was $15 million ($4 million for CECONY). Con Edison reasonably expects to resolve within the next twelve months approximately $3 million of various federal and state uncertainties due to the expected completion of ongoing tax examinations, of which the entire amount, if recognized, would reduce Con Edison's effective tax rate. The amount related to CECONY is $1 million, which, if recognized, would reduce CECONY’s effective tax rate. The total amount of unrecognized tax benefits, if recognized, that would reduce Con Edison’s effective tax rate is $15 million ($14 million, net of federal taxes) with $4 million attributable to CECONY.

The Companies recognize interest on liabilities for uncertain tax positions in interest expense and would recognize penalties, if any, in operating expenses in the Companies’ consolidated income statements. For the six months ended June 30, 2021, the Companies recognized an immaterial amount of interest expense and no penalties for uncertain tax positions in their consolidated income statements. At June 30, 2021 and December 31, 2020, the Companies recognized an immaterial amount of accrued interest on their consolidated balance sheets.