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Income Tax
 9 Months Ended
Sep. 30, 2022
Income Tax Disclosure [Abstract]  
Income Tax Income Tax
Con Edison’s income tax expense increased to $160 million for the three months ended September 30, 2022 from $127 million for the three months ended September 30, 2021. The increase in income tax expense is primarily due to higher income before income tax expense, higher state income taxes and assistance received from a New York State COVID-19 arrears program in 2022 (see “COVID-19 Regulatory Matters” in Note B), offset in part by higher income attributable to non-controlling interest and lower reserve for injuries and damages.

CECONY’s income tax expense increased to $124 million for the three months ended September 30, 2022 from $90 million for the three months ended September 30, 2021. The increase in income tax expense is primarily due to higher income before income tax expense, higher state income taxes, assistance received from a New York State COVID-19 arrears program in 2022 (see “COVID-19 Regulatory Matters” in Note B) and the absence of a favorable tax adjustment from a prior year tax return due to an increase in the general business tax credits, offset in part by lower reserve for injuries and damages.

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 September 30, 2022 and 2021 is as follows:

Con EdisonCECONY
(% of Pre-tax income)2022202120222021
STATUTORY TAX RATE
Federal21 %21 %21 %21 %
Changes in computed taxes resulting from:
State income tax, net of federal income tax benefit6 5 5 5 
Amortization of excess deferred federal income taxes(6)(7)(7)(8)
Taxes attributable to non-controlling interest— 4 — — 
Cost of removal1 1 1 1 
Other plant-related items— (1)— (1)
Renewable energy credits(1)(1)— — 
Allowance for uncollectible accounts, net of COVID-19 assistance— — 1 — 
Injuries and damages reserve
— — — 1 
Prior period federal income tax return adjustments— (1)— (1)
Other— — (1)— 
Effective tax rate21 %21 %20 %18 %

Con Edison’s income tax expense increased to $330 million for the nine months ended September 30, 2022 from $194 million for the nine months ended September 30, 2021. The increase in income tax expense is primarily due to higher income before income tax expense, higher state income taxes and an increase in the reserve for uncertain tax positions for prior years at the Clean Energy Businesses, offset in part by a lower loss attributable to non-controlling interest and an increase in research and development credits from prior years at the Utilities.

CECONY’s income tax expense increased to $232 million for the nine months ended September 30, 2022 from $188 million for the nine months ended September 30, 2021. The increase in income tax expense is primarily due to higher income before income tax expense, higher state income taxes and lower flow-through tax benefits in 2022 for plant-related items, offset in part by higher research and development credits from prior years.

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 nine months ended September 30, 2022 and 2021 is as follows:
Con EdisonCECONY
(% of Pre-tax income)2022202120222021
STATUTORY TAX RATE
Federal21 %21 %21 %21 %
Changes in computed taxes resulting from:
State income tax, net of federal income tax benefit6 5 5 5 
Amortization of excess deferred federal income taxes(8)(11)(10)(11)
Taxes attributable to non-controlling interest1 3 — — 
Cost of removal1 2 2 2 
Other plant-related items— (1)(1)(1)
Renewable energy credits(2)(2)— — 
Other— (1)— — 
Effective tax rate19 %16 %17 %16 %

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
As a result of an unfavorable settlement reached at appeals with the IRS in the second quarter of 2022, the Clean Energy Businesses increased its reserve for uncertain tax positions for prior years by $5 million. At September 30, 2022, the estimated liability for uncertain tax positions for Con Edison was $21 million ($7 million for CECONY). Con Edison reasonably expects to resolve within the next twelve months approximately $17 million of various federal 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 $4 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 $21 million, with $7 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 nine months ended September 30, 2022 and 2021, the Companies recognized an immaterial amount of interest expense and no penalties for uncertain tax positions in their consolidated income statements. At September 30, 2022 and December 31, 2021, the Companies recognized an immaterial amount of accrued interest on their consolidated balance sheets.