
	Years Ended December 31,
	2020		2019		2018
	(in millions)
Current income tax
Federal	$	527	$	531	$	275
State and local	63		80		45
Foreign	28		36		41
Total current income tax	618		647		361

Deferred income tax
Federal	(309)		(297)		20
State and local	(16)		(13)		2
Foreign	4		2		3
Total deferred income tax	(321)		(308)		25
Total income tax provision	$	297	$	339	$	386

On December 22, 2017, the Tax Act was signed into law. In 2018, the Company finalized its accounting related to the Tax Act and recorded a $3 million benefit related to foreign provisions.

The principal reasons that the aggregate income tax provision attributable to continuing operations is different from that computed by using the U.S. statutory rates of 21% were as follows:


	Years Ended December 31,
	2020		2019		2018
Tax at U.S. statutory rate	21.0	%	21.0	%	21.0	%
Changes in taxes resulting from:
Low income housing tax credits	(4.3)		(3.6)		(3.2)
State taxes, net of federal benefit	2.1		2.4		1.5
Dividends received deduction	(2.1)		(1.8)		(1.6)
Incentive compensation	(1.4)		—		—
Foreign tax credits, net of addback	—		(2.2)		(1.1)

Other, net	0.9		(0.6)		(1.1)



Income tax provision	16.2	%	15.2	%	15.5	%

Deferred income tax assets and liabilities result from temporary differences between the assets and liabilities measured for GAAP reporting versus income tax return purposes. Deferred income tax assets and liabilities are measured at the statutory rate of 21% as of both December 31, 2020 and 2019. The significant components of the Company’s deferred income tax assets and liabilities, which are included net within other assets or other liabilities on the Consolidated Balance Sheets, were as follows:


	December 31,
	2020		2019
	(in millions)
Deferred income tax assets
Liabilities for policyholder account balances, future policy benefits and claims	$	1,618	$	945
Deferred compensation	493		406
Postretirement benefits	65		45
Right of use lease liability	60		59
Investment related	—		188

Other	51		47
Gross deferred income tax assets	2,287		1,690
Less: valuation allowance	15		19
Total deferred income tax assets	2,272		1,671

Deferred income tax liabilities
Deferred acquisition costs	435		456
Net unrealized gains on Available-for-Sale securities	295		186
Investment related	253		—
Intangible assets	124		115
Depreciation expense	99		94
Goodwill	70		64
Right of use lease asset	54		54
Deferred sales inducement costs	44		50
Other	18		6
Gross deferred income tax liabilities	1,392		1,025
Net deferred income tax assets	$	880	$	646

Included in the Company’s deferred income tax assets are tax benefits primarily related to state net operating losses of $16 million, net of federal benefit, which will expire beginning December 31, 2021. Based on analysis of the Company’s tax position, management believes it is more likely than not that the Company will not realize certain state net operating losses of $11 million, state deferred tax assets of $2 million and foreign deferred tax assets of $2 million; therefore, a valuation allowance of $15 million has been established.


	2020		2019		2018
	(in millions)
Balance at January 1	$	100	$	92	$	76
Additions based on tax positions related to the current year	11		15		22
Reductions based on tax positions related to the current year	(1)		—		—
Additions for tax positions of prior years	10		39		9
Reductions for tax positions of prior years	(4)		(17)		(3)
Reductions due to lapse of statute of limitations	(5)		—		—
Audit settlements	(1)		(29)		(12)
Balance at December 31	$	110	$	100	$	92

If recognized, approximately $80 million, $67 million and $70 million, net of federal tax benefits, of unrecognized tax benefits as of December 31, 2020, 2019, and 2018, respectively, would affect the effective tax rate.

It is reasonably possible that the total amount of unrecognized tax benefits will change in the next 12 months. The Company estimates that the total amount of gross unrecognized tax benefits may decrease by $20 million to $30 million in the next 12 months primarily due to Internal Revenue Service (“IRS”) settlements and state exams.

The Company recognizes interest and penalties related to unrecognized tax benefits as a component of the income tax provision. The Company recognized a net increase of $2 million, a net decrease of $2 million, and a net increase of $2 million, in interest and penalties for the years ended December 31, 2020, 2019, and 2018, respectively. As of December 31, 2020 and 2019, the Company had a payable of $10 million and $8 million, respectively, related to accrued interest and penalties.

The Company or one or more of its subsidiaries files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The federal statute of limitations are closed on years through 2015, except for one issue for 2014 and 2015 which was claimed on amended returns. The IRS is currently auditing the Company’s U.S. income tax returns for 2016, 2017 and 2018. The Company’s state income tax returns are currently under examination by various jurisdictions for years ranging from 2010 through 2019. In the United Kingdom (“UK”), Her Majesty’s Revenue and Customs is performing a business risk review of the Company’s UK subsidiaries for the 2016 tax year.