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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The income tax provision for continuing operations consisted of the following for the years ended December 31, 2021, 2020 and 2019:
In millions202120202019
Current:
Federal$2,285 $2,615 $2,450 
State665 518 565 
2,950 3,133 3,015 
Deferred:
Federal(306)(450)(535)
State(122)(114)(114)
(428)(564)(649)
Total$2,522 $2,569 $2,366 

The following table is a reconciliation of the statutory income tax rate to the Company’s effective income tax rate for continuing operations for the years ended December 31, 2021, 2020 and 2019:
202120202019
Statutory income tax rate21.0 %21.0 %21.0 %
State income taxes, net of federal tax benefit4.1 3.2 4.0 
Health insurer fee— 2.2 — 
Basis difference upon disposition of subsidiary— (1.2)— 
Prior year refund claim (1.2)— — 
Other0.3 1.1 1.3 
Effective income tax rate24.2 %26.3 %26.3 %
The following table is a summary of the components of the Company’s deferred income tax assets and liabilities as of December 31, 2021 and 2020:
In millions20212020
Deferred income tax assets:
Lease and rents$5,563 $5,742 
Inventory99 80 
Employee benefits193 238 
Bad debts and other allowances489 395 
Net operating loss and capital loss carryforwards416 568 
Deferred income78 43 
Insurance reserves501 489 
Payroll tax deferral87 173 
Other396 500 
Valuation allowance(325)(454)
Total deferred income tax assets7,497 7,774 
Deferred income tax liabilities:
Retirement benefits(105)(29)
Investments(334)(421)
Lease and rents(4,947)(5,368)
Depreciation and amortization(8,381)(8,750)
Total deferred income tax liabilities(13,767)(14,568)
Net deferred income tax liabilities$(6,270)$(6,794)

As of December 31, 2021, the Company had net operating and capital loss carryovers of $416 million, which expire between 2022 and 2041. The Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and the Company’s recent operating results. The Company established a valuation allowance of $325 million as of December 31, 2021 because it does not consider it more likely than not that these deferred tax assets will be recovered.

A reconciliation of the beginning and ending balance of unrecognized tax benefits in 2021, 2020 and 2019 is as follows:
In millions202120202019
Beginning balance$768 $655 $661 
Additions based on tax positions related to the current year3 3 4 
Additions based on tax positions related to prior years52 182 115 
Reductions for tax positions of prior years(33)(56)(111)
Expiration of statutes of limitation(1)(2)(7)
Settlements(7)(14)(7)
Ending balance$782 $768 $655 

CVS Health Corporation and most of its subsidiaries are subject to U.S. federal income tax as well as income tax of numerous state and local jurisdictions. CVS Health Corporation participated in the Compliance Assurance Process through 2019, which is a program made available by the U.S. Internal Revenue Service (“IRS”) to certain qualifying large taxpayers, under which participants work collaboratively with the IRS to identify and resolve potential tax issues through open, cooperative and transparent interaction prior to the annual filing of their federal income tax returns. The IRS has completed its examinations of the Company’s consolidated U.S. federal income tax returns for tax years through and including 2013 and 2018. The IRS has substantially completed its examinations of the Company’s consolidated U.S. federal income tax returns for tax years 2014 through 2017 and 2019.
CVS Health Corporation and its subsidiaries are also currently under income tax examinations by a number of state and local tax authorities. As of December 31, 2021, no examination has resulted in any proposed adjustments that would result in a material change to the Company’s operating results, financial condition or liquidity.

Substantially all material state and local income tax matters have been concluded for fiscal years through 2014. Certain state exams are likely to be concluded and certain state statutes of limitations will lapse in 2022, but the change in the balance of the Company’s uncertain tax positions is projected to be immaterial. In addition, it is reasonably possible that the Company’s unrecognized tax benefits could change within the next twelve months due to the anticipated conclusion of various examinations with the IRS for various years. An estimate of the range of the possible change cannot be made at this time.

The Company records interest expense related to unrecognized tax benefits and penalties in the income tax provision. The Company accrued interest expense of approximately $40 million, $34 million and $49 million in 2021, 2020 and 2019, respectively. The Company had approximately $151 million and $121 million accrued for interest and penalties as of December 31, 2021 and 2020, respectively.

As of December 31, 2021, the total amount of unrecognized tax benefits that, if recognized, would affect the Company’s effective income tax rate is approximately $669 million, after considering the federal benefit of state income taxes.