Income Taxes

12 Months Ended

Dec. 31, 2020

The components of income taxes are as follows:


	NEE						FPL
	Years Ended December 31,						Years Ended December 31,
	2020		2019		2018		2020		2019		2018
	(millions)
Federal:
Current	$	105	$	167	$	30	$	53	$	348	$	251
Deferred	(148)		115		1,153		388		(29)		134
Total federal	(43)		282		1,183		441		319		385
State:
Current	18		23		63		44		49		91
Deferred	69		143		330		125		73		63
Total state	87		166		393		169		122		154
Total income taxes	$	44	$	448	$	1,576	$	610	$	441	$	539

A reconciliation between the effective income tax rates and the applicable statutory rate is as follows:


	NEE						FPL
	Years Ended December 31,						Years Ended December 31,
	2020		2019		2018		2020		2019		2018
Statutory federal income tax rate	21.0	%	21.0	%	21.0	%	21.0	%	21.0	%	21.0	%
Increases (reductions) resulting from:
State income taxes - net of federal income tax benefit(a)	2.8		3.4		4.2		4.1		3.5		4.5

Taxes attributable to noncontrolling interests	4.8		2.1		2.5		—		—		—

PTCs and ITCs - NEER	(11.8)		(7.2)		(3.0)		—		—		—
Amortization of deferred regulatory credit(b)	(7.2)		(6.2)		(1.8)		(5.0)		(8.1)		(5.0)
Foreign operations(c)	(2.4)		—		(0.8)		—		—		—


Other - net	(5.4)		(1.4)		(0.7)		(1.4)		(0.5)		(0.6)
Effective income tax rate	1.8	%	11.7	%	21.4	%	18.7	%	15.9	%	19.9	%

_________________________

(a)2019 reflects a valuation allowance of approximately $48 million related to deferred state tax credits.

(b)2019 reflects an adjustment of approximately $83 million recorded by FPL to reduce income tax expense for the cumulative amortization of excess deferred income taxes from January 1, 2018 as a result of the FPSC's order in connection with its review of impacts associated with tax reform. One of the provisions of the order requires FPL to amortize approximately $870 million of its excess deferred income taxes over a period not to exceed ten years.

(c)The 2020 gain on sale of the Spain solar projects was not taxable for federal and state income tax purposes (see Note 1 - Disposal of Businesses/Assets).

The income tax effects of temporary differences giving rise to consolidated deferred income tax liabilities and assets are as follows:


	NEE				FPL
	December 31,				December 31,
	2020		2019		2020		2019
	(millions)
Deferred tax liabilities:
Property-related	$	10,065	$	10,133	$	6,791	$	6,394
Pension	437		417		394		374




Investments in partnerships and joint ventures	2,238		2,019		3		—
Other	1,730		1,618		672		685
Total deferred tax liabilities	14,470		14,187		7,860		7,453
Deferred tax assets and valuation allowance:
Decommissioning reserves	290		317		290		286

Net operating loss carryforwards	299		380		2		2
Tax credit carryforwards	3,859		3,406		—		—
ARO and accrued asset removal costs	347		368		226		273
Regulatory liabilities	1,380		1,335		1,259		1,219
Other	755		515		293		258
Valuation allowance(a)	(289)		(285)		—		—
Net deferred tax assets	6,641		6,036		2,070		2,038
Net deferred income taxes	$	7,829	$	8,151	$	5,790	$	5,415

______________________

(a)Reflects valuation allowances related to deferred state tax credits and state operating loss carryforwards, and, in 2019, also reflects valuation allowances related to the solar projects in Spain that completely offset the related deferred taxes.

Deferred tax assets and liabilities are included on the consolidated balance sheets as follows:


	NEE				FPL
	December 31,				December 31,
	2020		2019		2020		2019
			(millions)

Noncurrent other assets	$	191	$	210	$	—	$	—

Deferred income taxes - noncurrent liabilities	(8,020)		(8,361)		(5,790)		(5,415)
Net deferred income taxes	$	(7,829)	$	(8,151)	$	(5,790)	$	(5,415)

The components of NEE's deferred tax assets relating to net operating loss carryforwards and tax credit carryforwards at December 31, 2020 are as follows:


	Amount			Expiration Dates
	(millions)
Net operating loss carryforwards:
Federal	$	2		2033-2037
State	280			2021-2040
Foreign	17			2021-2040
Net operating loss carryforwards	$	299
Tax credit carryforwards:
Federal	$	3,508		2029-2040
State	348		(a)	2021-2045
Foreign	3			2034-2040
Tax credit carryforwards	$	3,859

______________________

(a)Includes $191 million of ITC carryforwards with an indefinite expiration period.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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