Income Taxes

Questar

Details of Questar's income tax expense and deferred income taxes are provided in the following tables. The components of income tax expense were as follows:



	Year Ended December 31,
	2015			2014			2013
	(in millions)
Federal
Current	$	45.1		$	69.6		$	66.5
Deferred	56.3			47.5			18.4
State
Current	5.1			6.9			10.7
Deferred	4.3			2.1			5.9
Deferred investment tax credits recognized	(0.2		)	(0.2		)	(0.2		)
Total income tax expense	$	110.6		$	125.9		$	101.3

The difference between the statutory federal income tax rate and the Company's effective income tax rate is explained as follows:



	Year Ended December 31,
	2015		2014		2013
Federal income taxes statutory rate	35.0	%	35.0	%	35.0	%
Increase (decrease) in rate as a result of:
State income taxes, net of federal income tax benefit	1.9		1.6		4.0
Domestic production deduction	(2.0	)	(1.5	)	(1.5	)
Amortization of investment tax credits related to rate-regulated assets	(0.1	)	—		—
Tax benefits from dividends paid to employee stock plan	(1.2	)	(1.0	)	(1.0	)
Other	1.0		1.6		2.1
Effective income tax rate	34.6	%	35.7	%	38.6	%

The combined income tax rate decreased in 2015 due to an exclusion from taxable income of excise tax credits previously included in income and an increase in the domestic production deduction. The combined federal and state income tax rate was lower in 2014 due to research and development and state tax credits and an increase in the domestic production deduction. The 2013 combined effective federal and state income tax rate increased due to the impairment of Southern Trails Pipeline. There was no state tax benefit recorded in association with the impairment charge because the Company has limited state operations for Southern Trails Pipeline. The effective combined federal and state income tax rate also increased in 2013 due to adjustments to estimated state income taxes for the consolidated Questar return that were in excess of state income taxes calculated on a separate return basis for the operating companies.

Significant components of Questar's deferred income taxes were as follows:



	December 31,
	2015			2014
	(in millions)
Deferred income taxes - noncurrent
Deferred tax liabilities
Property, plant and equipment	$	881.8		$	827.0
Employee benefits	53.6			52.0
Other	0.6			0.5
Deferred tax liabilities - noncurrent	936.0			879.5
Deferred tax assets
Asset retirement obligations	21.3			22.5
Pension and other postretirement benefits	101.0			110.8
Deferred compensation	13.6			15.7
Hedging activities	13.1			13.2
State tax credits	3.4			3.3
Valuation allowance	(2.3		)	(1.6		)
Deferred tax assets, net of allowance - noncurrent	150.1			163.9
Net deferred income tax liability - noncurrent	$	785.9		$	715.6

Deferred income taxes - current
Deferred tax assets - current	$	14.9		$	15.7
Deferred tax liabilities - current	8.5			9.9
Net deferred income tax asset - current	$	6.4		$	5.8

Questar Gas

Details of Questar Gas's income tax expense and deferred income taxes are provided in the following tables. The components of income tax expense were as follows:



	Year Ended December 31,
	2015			2014			2013
	(in millions)
Federal
Current	$	(16.0	)	$	(11.9	)	$	6.0
Deferred	48.8			42.4			23.5
State
Current	(2.0		)	(1.9		)	0.6
Deferred	4.2			3.6			2.0
Deferred investment tax credit recognized	(0.2		)	(0.2		)	(0.2		)
Total income tax expense	$	34.8		$	32.0		$	31.9

The difference between the statutory federal income tax rate and Questar Gas's effective income tax rate is explained as follows:



	Year Ended December 31,
	2015		2014		2013
Federal income taxes statutory rate	35.0	%	35.0	%	35.0	%
Increase (decrease) in rate as a result of:
State income taxes, net of federal income tax benefit	1.4		1.3		2.1
Amortization of investment tax credits related to rate-regulated assets	(0.2	)	(0.2	)	(0.3	)
Other	(1.1	)	0.6		0.9
Effective income tax rate	35.1	%	36.7	%	37.7	%

Significant components of Questar Gas's deferred income taxes were as follows:



	December 31,
	2015		2014
	(in millions)
Deferred income taxes - noncurrent
Deferred tax liabilities
Property, plant and equipment	$	403.0	$	354.4
Employee benefits	28.0		23.5
Other	0.6		0.5
Deferred tax liabilities - noncurrent	431.6		378.4
Deferred tax assets
Deferred compensation	0.9		0.9
Deferred tax assets - noncurrent	0.9		0.9
Net deferred income tax liability - noncurrent	$	430.7	$	377.5

Deferred income taxes - current
Deferred tax assets - current	$	2.5	$	3.6
Deferred tax liabilities - current	8.5		9.9
Net deferred income tax liability - current	$	6.0	$	6.3

Questar Pipeline

Details of Questar Pipeline's income tax expense and deferred income taxes are provided in the following tables. The components of income tax expense were as follows:



	Year Ended December 31,
	2015		2014		2013
	(in millions)
Federal
Current	$	21.7	$	21.9	$	20.2
Deferred	10.0		11.6		(15.2		)
State
Current	1.0		1.0		1.3
Deferred	0.7		1.1		0.7
Total income tax expense	$	33.4	$	35.6	$	7.0

The difference between the statutory federal income tax rate and Questar Pipeline's effective income tax rate is explained as follows:



	Year Ended December 31,
	2015		2014		2013
Federal income taxes statutory rate	35.0	%	35.0	%	35.0	%
Increase in rate as a result of:
State income taxes, net of federal income tax benefit	1.2		1.5		8.5
Other	(0.3	)	0.5		2.6
Effective income tax rate	35.9	%	37.0	%	46.1	%

The 2013 combined effective federal and state income tax rate increased due to the impairment of Southern Trails Pipeline. There was no state tax benefit recorded in association with the impairment charge because the company has limited state operations for Southern Trails Pipeline.

Significant components of Questar Pipeline's deferred income taxes were as follows:



	December 31,
	2015			2014
	(in millions)
Deferred income taxes - noncurrent
Deferred tax liabilities
Property, plant and equipment	$	254.0		$	246.1
Employee benefits	12.4			10.8
Deferred tax liabilities - noncurrent	266.4			256.9
Deferred tax assets
Deferred compensation	1.6			2.0
Hedging activities	13.1			13.2
State tax credits	0.7			0.7
Valuation allowance	(0.5		)	(0.4		)
Deferred tax assets, net of allowance - noncurrent	14.9			15.5
Net deferred income tax liability - noncurrent	$	251.5		$	241.4

Net deferred income tax asset - current	$	1.6		$	1.9