Income Taxes (Tables)

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income tax provision from continuing operations

The income tax provision from continuing operations consisted of the following amounts:

	Year Ended December 31,
(In millions, except effective income tax rate)	2021			2020			2019
Current
State	$	48		$	22		$	2
Foreign	3			4			4
Total — current	51			26			6
Deferred
U.S. Federal	569			168			(3,000)
State	36			60			(340)
Foreign	16			(3)			—
Total — deferred	621			225			(3,340)
Total income tax expense/(benefit)	$	672		$	251		$	(3,334)
Effective income tax rate	23.5		%	33.0		%	(424.2)		%

Domestic and foreign components of income/(loss) before income tax (benefit)/expense

The following represented the domestic and foreign components of income from continuing operations before income taxes:

	Year Ended December 31,
(In millions)	2021		2020		2019
U.S.	$	2,759	$	749	$	771
Foreign	100		12		15
Total	$	2,859	$	761	$	786

Reconciliation of the U.S. federal statutory rate to NRG's effective rate

Reconciliations of the U.S. federal statutory tax rate to NRG's effective tax rate were as follows:

	Year Ended December 31,
(In millions, except effective income tax rate)	2021			2020			2019
Income from continuing operations before income taxes	$	2,859		$	761		$	786
Tax at federal statutory tax rate	600			160			165
Foreign rate differential	(3)			—			—
State taxes	111			18			13
Permanent differences	8			8			(9)
Changes in valuation allowance	(29)			24			(3,492)
Deferred impact of state tax rate changes	(10)			2			12
Recognition of uncertain tax benefits	(10)			3			(10)
Return to provision adjustments	5			36			—
Other	—			—			(13)
Income tax expense/(benefit)	$	672		$	251		$	(3,334)
Effective income tax rate	23.5		%	33.0		%	(424.2)		%

Company's deferred tax assets and liabilities

The temporary differences, which gave rise to the Company's deferred tax assets and liabilities consisted of the following:

	As of December 31,
(In millions)	2021		2020
Deferred tax assets:
Deferred compensation, accrued vacation and other reserves	$	114	$	79
Difference between book and tax basis of property	436		357
Pension and other postretirement benefits	65		86
Equity compensation	7		10
Bad debt reserve	168		16
Derivatives, net	—		11
U.S. Federal net operating loss carryforwards	1,773		2,117
Foreign net operating loss carryforwards	112		102
State net operating loss carryforwards	328		351
Federal and state tax credit carryforwards	384		384
Federal benefit on state uncertain tax positions	3		4
Interest disallowance carryforward per §163(j) of the Tax Act	6		4
Inventory obsolescence	9		6
Other	15		10
Total deferred tax assets	3,420		3,537
Deferred tax liabilities:
Emissions allowances	20		21
Derivatives	591		—
Goodwill	40		29
Intangibles amortization (excluding goodwill)	363		2
Equity method investments	62		156
Convertible Debt	14		16
Total deferred tax liabilities	1,090		224
Total deferred tax assets less deferred tax liabilities	2,330		3,313
Valuation allowance	(248)		(266)
Total net deferred tax assets, net of valuation allowance	$	2,082	$	3,047

Summary of NRG's net deferred tax position

The following table summarizes NRG's net deferred tax position as presented in the consolidated balance sheets:

	As of December 31,
(In millions)	2021		2020
Deferred tax asset	$	2,155	$	3,066
Deferred tax liability	(73)		(19)
Net deferred tax asset	$	2,082	$	3,047

Reconciliation of total amounts of uncertain tax benefits

The following table summarizes uncertain tax benefits activity:

	As of December 31,
(In millions)	2021		2020
Balance as of January 1	$	15	$	15
Increase due to current year positions	4		3
Increase due to acquired balance from Direct Energy	9		—
Settlements, payments and statute closure	(15)		(3)
Uncertain tax benefits as of December 31	$	13	$	15