
	Years Ended December 31,
	2020		2019		2018
Current:
Federal	$	6	$	9	$	12
State and local	17		12		22
	23		21		34
Deferred:
Federal	(22)		(2)		(15)
State and local	(1)		8		(2)
	(23)		6		(17)
Income tax expense	$	—	$	27	$	17

The significant differences between the U.S. Federal statutory rate and PGE’s Effective tax rate for financial reporting purposes are as follows:


	Years Ended December 31,
	2020		2019		2018
Federal statutory tax rate	21.0	%	21.0	%	21.0	%
Federal tax credits(1)	(20.5)		(13.4)		(16.7)

State and local taxes, net of federal tax benefit(2)	10.1		6.5		6.5
Flow through depreciation and cost basis differences	(4.9)		1.5		1.5
Amortization of excess deferred income tax(3)	(4.7)		(3.7)		(4.1)
Other	(1.0)		(0.7)		(0.8)
Effective tax rate	—	%	11.2	%	7.4	%

(1) Federal tax credits consist primarily of production tax credits (PTCs) earned from Company-owned wind-powered generating facilities. The federal PTCs are earned based on a per-kilowatt hour rate, and as a result, the annual amount of PTCs earned will vary based on weather conditions and availability of the facilities. The PTCs are generated for 10 years from the corresponding facilities’ in-service dates. PGE’s PTC generation ended or will end at various dates between 2017 and 2030.

(2) In 2019, Oregon enacted HB 3427, which imposed a new gross receipts tax on companies with annual revenues in excess of $1 million and applies to tax years beginning on or after January 1, 2020. The legislation defines that the tax applies to commercial activities sourced in Oregon, less certain deductions. The resulting amount is taxed at 0.57%.

(3) The majority of excess deferred income taxes related to remeasurement under the TCJA is subject to IRS normalization rules and will be amortized over the remaining regulatory life of the assets using the average rate assumption method.


	As of December 31,
	2020		2019
Deferred income tax assets:
Employee benefits	$	136	$	119
Price risk management	29		26
Regulatory liabilities	23		22
Tax credits	77		64

Total deferred income tax assets	265		231
Deferred income tax liabilities:
Depreciation and amortization	504		496
Regulatory assets	128		103
Other	7		10
Total deferred income tax liabilities	639		609
Deferred income tax liability, net	$	374	$	378

As of December 31, 2020, PGE has federal credit carryforwards of $77 million, consisting of PTCs, which will expire at various dates through 2040. PGE believes that it is more likely than not that its deferred income tax assets as of December 31, 2020 and 2019 will be realized; accordingly, no valuation allowance has been recorded. As of December 31, 2020, and 2019, PGE had no material unrecognized tax benefits.

PGE and its subsidiaries file a consolidated federal income tax return. The Company also files income tax returns in the states of Oregon, California, and Montana, and in certain local jurisdictions. The Internal Revenue Service (IRS) has completed its examination of all tax years through 2010 and all issues were resolved related to those years. The Company does not believe that any open tax years for federal or state income taxes could result in any adjustments that would be significant to the consolidated financial statements.