Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

19. Income Taxes

Components of earnings before income taxes and noncontrolling interests are as follows (in thousands):

	Year Ended December 31,
	2023		2022		2021
United States	$	6,203,409	$	10,212,850	$	9,076,921
Foreign		69,348		31,994		123,937
	$	6,272,757	$	10,244,844	$	9,200,858

The provision for income taxes consists of the following (in thousands):

	Year Ended December 31,
	2023			2022			2021
Current:
Federal	$	1,127,369		$	1,894,848		$	1,753,376
State		194,186			304,323			293,752
Foreign		16,992			12,882			19,695
Total current		1,338,547			2,212,053			2,066,823
Deferred:
Federal		20,621			77,961			10,916
State		(18,738	)		(120,440	)		(3,042	)
Foreign		19,536			(4,370	)		3,791
Total deferred		21,419			(46,849	)		11,665
Total provision for income taxes	$	1,359,966		$	2,165,204		$	2,078,488

A reconciliation of the federal statutory tax rate (21%) to the total provision is as follows:

	Year Ended December 31,
	2023			2022			2021
Taxes computed at statutory rate		21.00	%		21.00	%		21.00	%
State income taxes, net of federal income tax benefit		2.14	%		1.41	%		2.49	%
Federal research credit		-0.51	%		-0.10	%		-0.07	%
Equity in losses of foreign joint venture		0.17	%		0.11	%		—
Foreign rate differential		0.10	%		—			-0.03	%
Noncontrolling interests		-1.27	%		-0.85	%		-0.67	%
Other, net		0.05	%		-0.44	%		-0.13	%
Provision for income taxes		21.68	%		21.13	%		22.59	%

For the year ended December 31, 2023, the effective tax rate on continuing operations was 21.68% compared to 21.13% for the year ended December 31, 2022.

The 2023 effective tax rate includes an increased impact, when compared to 2022, from the Federal research credit and Noncontrolling interests lines. The 2022 effective tax rate included a net tax benefit of $76.4 million (-0.75%) for state tax credits, and a net tax benefit of $88.0 million (-0.86%) related to a change in the valuation allowance of a state deferred tax asset. Both items are included in the State income taxes, net of federal income tax benefit line.

Deferred tax assets and liabilities resulted from the following (in thousands):

	December 31,
	2023			2022
Deferred tax assets:
Accrued liabilities and reserves	$	252,794		$	236,132
Allowance for doubtful accounts		39,102			55,160
Inventory		141,460			143,384
Research and development expenditures		133,935			42,109
Post-retirement benefits		8,571			7,997
Hedges		5,146			—
Net operating loss carryforward		93,794			30,295
Tax credit carryforwards		215,630			162,498
Other deferred tax assets		12,016			10,894
Valuation allowance		(210,084	)		(77,510	)
Total deferred tax assets		692,364			610,959
Deferred tax liabilities:
Holdbacks and amounts not due under contracts		(15,714	)		(16,016	)
Hedges		—			(7,426	)
Intangibles		(706,174	)		(724,450	)
Property, plant and equipment		(1,170,080	)		(1,050,579	)
Other deferred tax liabilities		(48,579	)		(51,726	)
Book/Tax differences on debt modifications		(43,869	)		(45,458	)
Total deferred tax liabilities		(1,984,416	)		(1,895,655	)
Total net deferred tax liabilities	$	(1,292,052	)	$	(1,284,696	)

Non-current deferred tax assets included in other assets in the consolidated balance sheets were $40.7 million at December 31, 2023 ($19.3 million at December 31, 2022). Non-current deferred tax liabilities included in deferred credits and other liabilities in the consolidated balance sheets were $1.33 billion at December 31, 2023 ( $1.30 billion at December 31, 2022). Current federal and state income taxes receivable included in other current assets in the consolidated balance sheets were $346.1 million at December 31, 2023 ($564.7 million at December 31, 2022). Nucor paid $1.06 billion in net federal, state and foreign income taxes in 2023 ($2.63 billion and $1.68 billion in 2022 and 2021, respectively).

Nucor has not recognized deferred tax liabilities on its investment in foreign subsidiaries with undistributed earnings that satisfy the permanent reinvestment requirements (the deferred tax liabilities

on the investments not permanently reinvested are immaterial). While Nucor considers future earnings to be permanently reinvested, it is expected that potential future distributions will likely be nontaxable. If this assertion of permanent reinvestment were to change, there may be deferred tax liabilities related to the withholding tax impacts on the actual distribution of certain cumulative undistributed foreign earnings, but the Company believes this amount to be immaterial.

State NOL carryforwards were $185.1 million at December 31, 2023 ($285.4 million at December 31, 2022). If unused, they will expire between 2024 and 2043. Foreign NOL carryforwards were $325.6 million at December 31, 2023 ($79.4 million at December 31, 2022). If unused, the foreign NOL carryforwards will expire between 2026 and 2042.

At December 31, 2023, Nucor had approximately $188.3 million of unrecognized tax benefits, of which $187.6 million would affect Nucor's effective tax rate, if recognized. At December 31, 2022, Nucor had approximately $141.7 million of unrecognized tax benefits, of which $141.1 million would affect Nucor's effective tax rate, if recognized.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits recorded in deferred credits and other liabilities in the consolidated balance sheets is as follows (in thousands):

	December 31,
	2023			2022			2021
Balance at beginning of year	$	141,692		$	95,136		$	47,965
Additions based on tax positions related to current year		44,113			54,438			52,853
Reductions based on tax positions related to    current year		—			—			—
Additions based on tax positions related to prior years		9,886			13,473			2,405
Reductions based on tax positions related to    prior years		(496	)		(9,275	)		(3,060	)
Reductions due to settlements with taxing authorities		—			—			—
Reductions due to statute of limitations lapse		(6,941	)		(12,080	)		(5,027	)
Balance at end of year	$	188,254		$	141,692		$	95,136

We estimate that in the next 12 months, our gross uncertain tax positions, exclusive of interest, could decrease by as much as $5.6 million, as a result of the expiration of the applicable statute of limitations.

During 2023, Nucor recognized $10.4 million of expense in interest and penalties ($9.4 million of expense in 2022 and $5.5 million of expense in 2021). The interest and penalties are included in interest expense, net and marketing, administrative and other expenses, respectively, in the consolidated statements of earnings. As of December 31, 2023, Nucor had approximately $37.4 million of accrued interest and penalties related to uncertain tax positions (approximately $26.9 million at December 31, 2022). The accrued interest and penalties are included in accrued expenses and other current liabilities and deferred credits and other liabilities, respectively, in the consolidated balance sheets.

The IRS is currently examining Nucor’s 2015, 2019, and 2020 federal income tax returns. Nucor has concluded U.S. federal income tax matters for tax years through 2014, and for the tax years 2016 and 2018. The tax years 2017, 2021, and 2022 remain open to examination by the IRS. The 2015 through 2021 Canadian income tax returns for Harris and certain related affiliates are currently under examination by the Canada Revenue Agency. The tax years 2016 through 2022 remain open to examination by other major taxing jurisdictions to which Nucor is subject (primarily Canada, Trinidad & Tobago, and other state and local jurisdictions).