Income Taxes (Tables)

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Components of income tax expense

The components of income tax expense for the years ended December 31 included in the Consolidated Statements of Income were as follows:

(Millions)	2022		2021		2020
Current income tax expense:
U.S. federal	$	2,445	$	1,656	$	1,122
U.S. state and local	339		351		339
Non-U.S.	476		328		639
Total current income tax expense	3,260		2,335		2,100
Deferred income tax (benefit) expense:
U.S. federal	(763)		231		(931)
U.S. state and local	(117)		22		(119)
Non-U.S.	(309)		41		111
Total deferred income tax (benefit) expense	(1,189)		294		(939)
Total income tax expense	$	2,071	$	2,629	$	1,161

Effective income tax rate

A reconciliation of the U.S. federal statutory rate of 21 percent as of December 31, 2022, 2021 and 2020, to our actual income tax rate was as follows:

	2022		2021		2020
U.S. statutory federal income tax rate	21.0	%	21.0	%	21.0	%
(Decrease) increase in taxes resulting from:
Tax credits and tax-exempt income (a)	(0.9)		(0.1)		(4.1)
State and local income taxes, net of federal benefit	3.1		3.0		3.7
Non-U.S. subsidiaries' earnings	(0.1)		1.1		2.4
Tax settlements and lapse of statute of limitations	(2.1)		(0.3)		(1.6)
Valuation allowances	(0.1)		—		4.0
Other	0.7		(0.1)		1.6
Actual tax rates	21.6	%	24.6	%	27.0	%

(a)Includes the implementation of PAM related to investments in QAH projects for the year ended December 31, 2021.

Components of deferred tax assets and liabilities

The significant components of deferred tax assets and liabilities as of December 31 are reflected in the following table:

(Millions)	2022		2021
Deferred tax assets:
Reserves not yet deducted for tax purposes	$	4,052	$	3,637
Employee compensation and benefits	353		359
Net operating loss and tax credit carryforwards	411		398
Other	776		809
Gross deferred tax assets	5,592		5,203
Valuation allowance	(537)		(472)
Deferred tax assets after valuation allowance	5,055		4,731
Deferred tax liabilities:
Intangibles and fixed assets	671		1,320
Deferred revenue	126		189
Deferred interest	118		133
Investment in joint ventures	17		183
Other	618		521
Gross deferred tax liabilities	1,550		2,346
Net deferred tax assets	$	3,505	$	2,385

Changes in unrecognized tax benefits

The following table presents changes in unrecognized tax benefits:

(Millions)	2022		2021		2020
Balance, January 1	$	1,024	$	790	$	726
Increases:
Current year tax positions	119		64		57
Tax positions related to prior years	30		225		105
Effects of foreign currency translations	—		—		—
Decreases:
Tax positions related to prior years	(30)		(14)		(24)
Settlements with tax authorities	(74)		(15)		(15)
Lapse of statute of limitations	(104)		(17)		(58)
Effects of foreign currency translations	(3)		(9)		(1)
Balance, December 31	$	962	$	1,024	$	790