Taxes on Income

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Taxes on Income

Taxes on Income

The components of taxes on income are as follows:

Year Ended December 31,	2023		2022		2021
Current:
Federal	$	1,658	$	1,889	$	1,507
State	131		334		298
Total current	1,789		2,223		1,805
Deferred:
Federal	(395)		(26)		38
State	(83)		8		15
Total deferred	(478)		(18)		53
Taxes on income	$	1,311	$	2,205	$	1,858

The temporary differences that created deferred tax assets and liabilities are detailed below:

December 31,	2023		2022
Deferred tax assets:
Net unrealized loss on available for sale securities	$	5,610	$	7,159
Section 174 capitalization associated with internal-use software development	363		96
Employee compensation, severance, and benefits	272		251
Operating lease liabilities	216		242
Net operating loss carryforwards	8		9
Other	219		158
Total deferred tax assets	6,688		7,915
Valuation allowance	(16)		(9)
Deferred tax assets — net of valuation allowance	6,672		7,906
Deferred tax liabilities:
Amortization of acquired intangible assets	(1,758)		(1,837)
Capitalized internal-use software development costs	(200)		(187)
Operating lease ROU assets	(156)		(224)
Equipment, office facilities, and property	(109)		(151)
Other	(149)		(137)
Total deferred tax liabilities	(2,372)		(2,536)
Deferred tax assets (liabilities) — net (1)	$	4,300	$	5,370

(1) Amounts are included in other assets on the consolidated balance sheet at December 31, 2023 and 2022.

A reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows:

Year Ended December 31,	2023		2022		2021
Federal statutory income tax rate	21.0	%	21.0	%	21.0	%
State income taxes, net of federal tax benefit	1.6		3.5		3.4
Research and development credits	(1.2)		—		—
Equity compensation benefit	(0.5)		(0.5)		(1.2)
Other	(0.3)		(0.5)		0.9
Effective income tax rate	20.6	%	23.5	%	24.1	%

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

December 31,	2023		2022
Balance at beginning of year	$	205	$	271
Additions for tax positions related to the current year	46		36
Additions for tax positions related to prior years	177		12
Reductions for tax positions related to prior years	(36)		(59)
Reductions due to lapse of statute of limitations	(8)		(13)
Reductions for settlements with tax authorities	(4)		(42)
Balance at end of year	$	380	$	205

Unrecognized tax benefits totaled $380 million and $205 million as of December 31, 2023 and 2022, respectively, $315 million and $165 million of which if recognized, would affect the annual effective tax rate.

Interest and penalties were accrued related to unrecognized tax benefits in tax expense. At December 31, 2023 and 2022, we had accrued approximately $72 million and $41 million, respectively, for the payment of interest and penalties.

The Company and its subsidiaries are subject to routine examinations by the respective federal, state, and applicable local jurisdictions’ taxing authorities. Federal returns for 2017 through 2022 remain subject to examination. The years open to examination by state and local governments vary by jurisdiction.