Income taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income taxes

Income taxes

The provision (benefit) for income taxes consists of the following (in thousands):

2022	Current		Deferred		Total
Federal	$	161,438	$	13,435	$	174,873
State and other	23,456		4,041		27,497
Total	$	184,894	$	17,476	$	202,370

2021	Current		Deferred		Total
Federal	$	114,255	$	15,400	$	129,655
State and other	11,310		(5,484)		5,826
Total	$	125,565	$	9,916	$	135,481

2020	Current		Deferred		Total
Federal	$	123,882	$	4,532	$	128,414
State and other	21,878		4,001		25,879
Total	$	145,760	$	8,533	$	154,293

Income before income taxes attributable to TEGNA Inc. consists entirely of domestic income.

The provision for income taxes varies from the U.S. federal statutory tax rate as a result of the following differences:

	2022	2021	2020
U.S. statutory tax rate	21.0%	21.0%	21.0%
Increase (decrease) in taxes resulting from:
State taxes (net of federal income tax benefit)	2.7	2.6	3.3
Uncertain tax positions, settlements and lapse of statutes of limitations	—	0.3	(0.1)
Valuation allowance on equity method investment	0.6	—	0.4
Other valuation allowances, tax rate changes, & deferred adjustments	(0.6)	(1.7)	(0.1)
Non-deductible transaction costs	0.5	0.1	—
Net excess benefits or expense on share-based payments	(0.3)	(0.2)	(0.1)
Other, net	0.4	—	(0.2)
Effective tax rate	24.3%	22.1%	24.2%

Deferred income taxes reflect temporary differences in the recognition of revenue and expense for tax reporting and financial statement purposes. Deferred tax liabilities and assets are adjusted for changes in tax laws or tax rates of the various tax jurisdictions as of the enacted date.

Deferred tax liabilities and assets were composed of the following as of December 31, 2022 and 2021 (in thousands):

	Dec. 31,
	2022		2021
Deferred tax liabilities
Accelerated amortization of deductible intangibles	$	540,260	$	534,438
Accelerated depreciation	67,278		67,697
Right-of-use assets for operating leases	19,467		21,648
Other	4,183		3,792
Total deferred tax liabilities	631,188		627,575
Deferred tax assets
Accrued compensation costs	23,439		24,147
Pension and post-retirement medical and life	20,775		17,400
Loss carryforwards	12,537		31,841
Operating lease liabilities	20,403		22,582
Other	24,242		25,160
Total deferred tax assets	101,396		121,130
Deferred tax asset valuation allowance	26,339		41,929
Total net deferred tax liabilities	$	556,131	$	548,374

As of December 31, 2022, we had approximately $5.1 million of state net operating loss carryovers that, if not utilized, will expire in various amounts beginning in 2023 through 2041 in addition to $1.8 million of federal and $9.1 million of state interest disallowance carryforwards that do not expire.

Included in total deferred tax assets are valuation allowances of approximately $26.3 million as of December 31, 2022 and $41.9 million as of December 31, 2021, primarily related to minority investments, federal and state interest disallowance carryforwards, accrued compensation costs, state net operating loss carryforwards, and state capital loss carryforwards. This $15.6 million change in valuation allowance is primarily the result of federal and state capital loss carryforwards expiring on December 31, 2022 and accounted for $14.3 million of the decrease. The capital loss carryforward deferred tax asset and associated valuation allowance were both reduced in equal amounts for the expired tax attribute. If, in the future, we believe that it is more likely than not that deferred tax assets with valuation allowances recorded against them will be realized, the valuation allowances will be reversed in the Consolidated Statements of Income.

Realization of deferred tax assets for which valuation allowances have not been established is dependent upon generating sufficient future taxable income. We expect to realize the benefit of these deferred tax assets through future reversals of our deferred tax liabilities, through the recognition of taxable income in the allowable carryback and carryforward periods, and through implementation of future tax planning strategies. Although realization is not assured, we believe it is more likely than not that all deferred tax assets for which valuation allowances have not been established will be realized.

The following table summarizes the activity related to deferred tax asset valuation allowances (in thousands):

	2022		2021		2020
Beginning at beginning of period	$	41,929	$	43,467	$	45,661
Additions to valuation allowance	7,228		6,108		3,719
Reductions to valuation allowance	(22,818)		(7,646)		(5,913)
Balance at the end of the period	$	26,339	$	41,929	$	43,467

Tax Matters Agreements

Prior to the May 31, 2017 spin-off of the Cars.com business, we entered into a Tax Matters Agreement with Cars.com Inc. that governs each company’s respective rights, responsibilities, and obligations with respect to tax liabilities and benefits, tax attributes, tax contests and other matters regarding income taxes, non-income taxes and related tax returns. The agreement provides that we will generally indemnify Cars.com against taxes attributable to assets or operations for all tax periods or portions thereof prior to the spin-off date including separately-filed U.S. federal, state, and foreign taxes. Our 2017 tax year is currently under examination by the Internal Revenue Service and the relevant federal statute of limitations remains open until November 30, 2023.

Uncertain Tax Positions

The following table summarizes the activity related to unrecognized tax benefits, excluding the federal tax benefit of state tax deductions (in thousands):

	2022		2021		2020
Change in unrecognized tax benefits
Balance at beginning of year	$	8,196	$	7,435	$	8,050
Additions for tax positions of prior years	—		1,363		630
Settlements	(9)		—		—
Reductions due to lapse of statutes of limitations	(462)		(602)		(1,245)
Balance as of end of year	$	7,725	$	8,196	$	7,435

The total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate was $6.4 million as of December 31, 2022, and $6.8 million as of December 31, 2021. This amount includes the federal tax benefit of state tax deductions.

We recognize interest and penalties related to unrecognized tax benefits as a component of income tax expense. We also recognize interest income attributable to overpayment of income taxes and from the reversal of interest expense previously recorded for uncertain tax positions which are subsequently released as a component of income tax expense. We recognized expense from interest for uncertain tax positions of $0.2 million in 2022 and $0.7 million in 2021. We did not recognize income or expense in 2020. The amount of accrued interest expense and penalties payable related to unrecognized tax benefits was $0.9 million as of December 31, 2022 and $0.7 million as of December 31, 2021.

We file income tax returns in the U.S. and various state jurisdictions. The 2016 through 2022 tax years remain subject to examination by the Internal Revenue Service and state authorities. Tax years before 2016 remain subject to examination by certain states due to ongoing audits.

It is reasonably possible that the amount of unrecognized benefit with respect to certain of our unrecognized tax positions will increase or decrease within the next 12 months. These changes may be the result of settlement of ongoing audits, lapses of statutes of limitations or other regulatory developments. At this time, we estimate the amount of our gross unrecognized tax positions may decrease by up to approximately $2.1 million within the next 12 months primarily due to lapses of statutes of limitations and settlement of ongoing audits in various jurisdictions.