Income Tax

9 Months Ended

Sep. 30, 2023

Income Tax Disclosure [Abstract]

Income Tax

INCOME TAX

An estimate of annual income tax expense is made each interim period using estimates for annual pre-tax income, regulatory flow-through adjustments, tax credits, and other items. The estimated annual effective tax rate is applied to year-to-date, pre-tax income to determine income tax expense for the interim period consistent with the annual estimate. Discrete events are recorded in the interim period in which they occur or become known.

The effective income tax rate varied from the federal statutory rate due to the following:

	Three Months Ended September 30,
	NW Holdings						NW Natural
In thousands	2023			2022			2023			2022
Income tax at statutory rate (federal)	$	(6,716)		$	(5,533)		$	(6,131)		$	(5,305)
State income tax	(2,742)			(2,376)			(2,633)			(2,306)
Increase (decrease):
Differences required to be flowed-through by regulatory commissions	1,015			1,232			1,018			1,232
Other, net	151			(81)			39			(76)
Total benefit for income taxes	$	(8,292)		$	(6,758)		$	(7,707)		$	(6,455)
Effective income tax rate	25.9		%	25.7		%	26.4		%	25.6		%

	Nine Months Ended September 30,
	NW Holdings						NW Natural
In thousands	2023			2022			2023			2022
Income tax at statutory rate (federal)	$	13,928		$	10,710		$	15,723		$	11,554
State income tax	5,618			4,298			5,990			4,497
Increase (decrease):
Differences required to be flowed-through by regulatory commissions	(2,055)			(2,003)			(2,051)			(2,003)
Other, net	(393)			(370)			(625)			(370)
Total provision for income taxes	$	17,098		$	12,635		$	19,037		$	13,678
Effective income tax rate	25.8		%	24.8		%	25.4		%	24.9		%

The NW Holdings and NW Natural effective income tax rates for the nine months ended September 30, 2023 compared to the same period in 2022 changed primarily as a result of changes in pre-tax income. See Note 11 in the 2022 Form 10-K for more detail on income taxes and effective tax rates.