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Income Taxes (Tables)
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income From Continuing Operations Before Income Tax
Income before income tax and the provision for income tax consist of the following (in millions):
Years Ended December 31
202120202019
Income (loss) before income taxes:   
Ireland$15 $(86)$200 
U.K.549 634 228 
U.S.(818)(28)(220)
Other2,185 1,946 1,662 
Total$1,931 $2,466 $1,870 
Income tax expense:   
Current:   
Ireland$2 $2 $1 
U.K.50 30 20 
U.S. federal197 126 22 
U.S. state and local72 22 41 
Other291 259 249 
Total current tax expense$612 $439 $333 
Deferred tax expense (benefit):   
Ireland$(1)$(1)$(1)
U.K.131 39 35 
U.S. federal(83)(72)(20)
U.S. state and local(30)(4)(27)
Other(6)47 (23)
Total deferred tax expense (benefit)$11 $9 $(36)
Total income tax expense$623 $448 $297 
Reconciliation of the Income Tax Provisions based on the U.S. Statutory Corporate Tax Rate to the Provisions Reflected in the Consolidated Financial Statements The reconciliation to the provisions reflected in the Consolidated Financial Statements is as follows:
Years Ended December 31
202120202019
Statutory tax rate25.0%25.0%19.0%
U.S. state income taxes, net of U.S. federal benefit1.51.00.5
Taxes on international operations (1) (4)
(15.4)(9.8)(6.0)
Nondeductible expenses3.32.11.6
Adjustments to prior year tax requirements (0.2)—0.1
Deferred tax adjustments, including statutory rate changes3.20.7—
Deferred tax adjustments, international earnings1.80.7—
Adjustments to valuation allowances(0.2)—1.8
Change in uncertain tax positions2.11.52.2
Excess tax benefits related to shared based compensation (2)
(2.4)(2.2)(2.8)
U.S. Tax Reform impact (3)
——(0.3)
Capital Losses—(1.8)—
Non-deductible transaction costs1.11.3—
Non-deductible termination fee12.9——
Other — net(0.4)(0.3)(0.2)
Effective tax rate32.3%18.2%15.9%
(1)The Company determines the adjustment for taxes on international operations based on the difference between the statutory tax rate applicable to earnings in each foreign jurisdiction and the enacted rate of 25.0%, 25.0% and 19.0% at December 31, 2021, 2020, and 2019, respectively. The benefit to the Company’s effective income tax rate from taxes on international operations relates to benefits from lower-taxed global operations, primarily due to the use of global funding structures and the tax holiday in Singapore.
(2)Excess tax benefits and deficiencies from share-based payment transactions are recognized as income tax expense or benefit in the Company’s Consolidated Statements of Income.
(3)The impact of the Tax Cuts and Jobs Act including adjustments to the Transition Tax.
(4)In July 2020, final U.S. tax regulations were issued regarding the GILTI high tax election, allowing taxpayers to exclude from GILTI the income of a Controlled Foreign Corporation that incurs a foreign tax rate more than 90% of the top U.S. corporate tax rate. A GILTI high tax election may be made on an annual basis, and taxpayers may choose to apply the election to taxable years beginning after December 31, 2017. The Company expects to make the GILTI high-tax election for 2021 and therefore recorded the impact of making the election.
Components of Aon's Deferred Tax Assets and Liabilities
The components of the Company’s deferred tax assets and liabilities are as follows (in millions):
As of December 3120212020
Deferred tax assets:  
Net operating loss, capital loss, interest, and tax credit carryforwards$581 $653 
Lease liabilities207 248 
Employee benefit plans160 312 
Other accrued expenses132 103 
Accrued interest97 — 
Federal and state benefit of interest from uncertain tax positions (1)
45 37 
Deferred revenue36 36 
Investment basis differences25 28 
Lease and service guarantees1 2 
Other25 17 
Total1,309 1,436 
Valuation allowance on deferred tax assets(230)(205)
Total$1,079 $1,231 
Deferred tax liabilities: 
Intangibles and property, plant and equipment$(243)$(291)
Lease right-of-use asset(173)(211)
Deferred costs(159)(141)
Unremitted earnings(58)(37)
Other accrued expenses(27)(22)
Unrealized foreign exchange gains(22)(26)
Other(32)(41)
Total$(714)$(769)
Net deferred tax asset $365 $462 
(1)The $37 million of Federal and state benefit of interest from uncertain tax positions as of December 31, 2020 was previously classified as Other.
Deferred Income Taxes (Assets and Liabilities Netted by Jurisdiction) as Classified in the Consolidated Statements of Financial Position
Deferred income taxes (assets and liabilities have been netted by jurisdiction) have been classified in the Consolidated Statements of Financial Position as follows (in millions):
As of December 3120212020
Deferred tax assets — non-current 766 724 
Deferred tax liabilities — non-current (401)(262)
Net deferred tax asset $365 $462 
Summary of Operating and Capital Loss Carryforwards
The Company had the following carryforwards (in millions):
As of December 3120212020
U.K.
Operating loss carryforwards$41 $266 
Capital loss carryforwards$573 $577 
Interest carryforwards$— $121 
U.S.
Federal operating loss carryforwards$25 $49 
Federal capital loss carryforwards$112 $112 
Federal interest carryforwards$1,140 $1,220 
State operating loss carryforwards$398 $378 
State capital loss carryforwards$123 $123 
State interest carryforwards$551 $573 
Other Non-U.S.
Operating loss carryforwards$301 $400 
Capital loss carryforwards$35 $42 
Interest carryforwards$26 $34 
Other carryforwards$5 $— 
Reconciliation of the Beginning and Ending Amount of Unrecognized Tax Benefits
The following is a reconciliation of the Company’s beginning and ending amount of uncertain tax positions (in millions):
20212020
Balance at January 1$321 $299 
Additions based on tax positions related to the current year33 25 
Additions for tax positions of prior years7 7 
Reductions for tax positions of prior years(4)(3)
Settlements— — 
Business combinations— — 
Lapse of statute of limitations(10)(7)
Foreign currency translation— — 
Balance at December 31$347 $321