Income Tax

3 Months Ended

Mar. 31, 2024

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 March 31,
	NW Holdings						NW Natural
In thousands	2024			2023			2024			2023
Income tax at statutory rate (federal)	$	18,514		$	20,332		$	19,579		$	21,412
State income tax	7,577			8,149			7,849			8,406
Increase (decrease):
Differences required to be flowed-through by regulatory commissions	(1,579)			(2,909)			(1,580)			(2,909)
Other, net	(173)			(425)			(175)			(487)
Total provision for income taxes	$	24,339		$	25,147		$	25,673		$	26,422
Effective income tax rate	27.6		%	26.0		%	27.5		%	25.9		%

The NW Holdings and NW Natural effective income tax rates for the three months ended March 31, 2024 compared to the same period in 2023 changed primarily as a result of lower regulatory flow-through. The income tax benefit resulting from applying a lower U.S. corporate income tax rate to gas reserves investments, that originally occurred in 2017 as a result of the TCJA, was completely amortized to the benefit of customers in 2023. See Note 11 in the 2023 Form 10-K for more detail on income taxes and effective tax rates.