Income Taxes

9 Months Ended

Sep. 30, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

NEE's effective income tax rate for the three months ended September 30, 2021 and 2020 was approximately (9.7)% and 10.3%, respectively, and for the nine months ended September 30, 2021 and 2020 was approximately 4.3% and 3.0%, respectively. NEE's effective income tax rate is based on the composition of pre-tax income and primarily reflects the impact of unfavorable changes in the fair value of commodity derivatives for the three and nine months ended September 30, 2021. For the nine months ended September 30, 2020, NEE's effective income tax rate also reflects the first quarter of 2020 impact of unfavorable changes in the fair value of interest rate derivative instruments and equity securities held in NEER's nuclear decommissioning funds, and the gain on the sale of the Spain solar projects that was not taxable for federal and state income tax purposes (see Note 11 – Disposal of Businesses/Assets and Sale of Noncontrolling Ownership Interests).

A reconciliation between the effective income tax rates and the applicable statutory rate is as follows:

	NEE				FPL				NEE				FPL
	Three Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020		2021		2020		2021		2020
Statutory federal income tax rate	21.0	%	21.0	%	21.0	%	21.0	%	21.0	%	21.0	%	21.0	%	21.0	%
Increases (reductions) resulting from:
State income taxes – net of federal income tax benefit	5.4		1.9		2.9		3.8		1.0		1.3		3.7		4.0
Taxes attributable to noncontrolling interests	15.6		1.8		—		—		6.9		2.9		—		—
PTCs and ITCs – NEER	(36.2)		(7.4)		—		—		(15.3)		(8.7)		—		—
Amortization of deferred regulatory credit	(14.1)		(4.4)		(3.5)		(5.3)		(6.2)		(5.4)		(3.5)		(5.0)
Foreign operations	0.7		—		—		—		0.3		(2.2)		—		—
Other – net	(2.1)		(2.6)		(0.5)		(0.9)		(3.4)		(5.9)		(0.7)		(1.4)
Effective income tax rate	(9.7)	%	10.3	%	19.9	%	18.6	%	4.3	%	3.0	%	20.5	%	18.6	%

NEE recognizes PTCs as wind energy is generated and sold based on a per kWh rate prescribed in applicable federal and state statutes, which may differ significantly from amounts computed, on a quarterly basis, using an overall effective income tax rate anticipated for the full year. NEE uses this method of recognizing PTCs for specific reasons, including that PTCs are an integral part of the expected value of most wind projects and a fundamental component of such wind projects' results of operations. PTCs, as well as ITCs, can significantly affect NEE's effective income tax rate depending on the amount of pretax income. The amount of PTCs recognized can be significantly affected by wind generation and by the roll off of PTCs after ten years of production.