Income Taxes

3 Months Ended

Mar. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

NEE's effective income tax rate for the three months ended March 31, 2023 and 2022 was approximately 17.8% and 34.1%, respectively. NEE's effective income tax rate is based on the composition of pretax income or loss, and, for the three months ended March 31, 2022, primarily reflects the impact of unfavorable changes in the fair value of commodity derivatives and equity securities held in NEER's nuclear decommissioning funds, as well as the first quarter of 2022 impairment charge related to the investment in Mountain Valley Pipeline (see Note 3 – Nonrecurring Fair Value Measurements).

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

	NEE				FPL
	Three Months Ended March 31,				Three Months Ended March 31,
	2023		2022		2023		2022
Statutory federal income tax rate	21.0	%	21.0	%	21.0	%	21.0	%
Increases (reductions) resulting from:
State income taxes – net of federal income tax benefit	3.2		5.7		4.2		4.3
Taxes attributable to noncontrolling interests	3.3		(4.7)		—		—
PTCs and ITCs	(6.1)		6.2		(1.6)		—
Amortization of deferred regulatory credit	(2.1)		4.7		(3.5)		(4.0)
Other – net	(1.5)		1.2		(0.4)		(0.6)
Effective income tax rate	17.8	%	34.1	%	19.7	%	20.7	%

NEE recognizes PTCs as wind and solar 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 and some solar projects and a fundamental component of such wind and solar 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 or loss. The amount of PTCs recognized can be significantly affected by wind and solar generation and by the roll off of PTCs after ten years of production absent a retrofitting of the wind and solar projects.