Provision (Benefit) for Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Provision (Benefit) for Income Taxes [Text Block]

Note 6 – Provision (Benefit) for Income Taxes

The Provision (benefit) for income taxes from continuing operations includes:

	Year Ended December 31,
	2024		2023		2022
	(Millions)
Current:
Federal	$	125	$	3	$	(25)
State	9		21		19
	134		24		(6)
Deferred:
Federal	472		872		424
State	34		109		7
	506		981		431
Provision (benefit) for income taxes	$	640	$	1,005	$	425

Reconciliations from the Provision (benefit) at statutory rate from continuing operations to recorded Provision (benefit) for income taxes are as follows:

	Year Ended December 31,
	2024		2023		2022
	(Millions)
Provision (benefit) at statutory rate	$	627	$	925	$	534
Increases (decreases) in taxes resulting from:
State income taxes (net of federal benefit)	79		129		113
State deferred income tax rate change	(44)		(25)		(92)
Federal valuation allowance	—		—		(70)
Federal settlements	—		—		(45)
Impact of nontaxable noncontrolling interests	(25)		(26)		(14)
Other – net	3		2		(1)
Provision (benefit) for income taxes	$	640	$	1,005	$	425

The State deferred income tax rate change benefit of $44 million, $25 million and $92 million in 2024, 2023 and 2022, respectively, is related to a decrease in Williams’ estimate of the deferred state income tax rate (net of federal effect). The 2024 benefit is driven primarily by a decrease in the Louisiana state income tax rate and the enacted decline in the Pennsylvania state income tax rate over the next several years.

During the course of audits of its business by domestic and foreign tax authorities, Williams frequently faces challenges regarding the amount of taxes due. These challenges include questions regarding the timing and amount of deductions and the allocation of income among various tax jurisdictions. In evaluating the liability associated with its various filing positions, Williams applies the two-step process of recognition and measurement. In association with this liability, Williams records an estimate of related interest and tax exposure as a component of its tax provision. The impact of this accrual is included within Other – net in its reconciliation of the Provision (benefit) at statutory rate to recorded Provision (benefit) for income taxes.

Significant components of Deferred income tax liabilities are as follows:

	December 31,
	2024		2023
	(Millions)
Gross deferred income tax liabilities:
Property, plant and equipment	$	4,501	$	3,541
Investments	1,733		1,740
Other	193		146
Total gross deferred income tax liabilities	6,427		5,427
Gross deferred income tax assets:
Accrued liabilities	1,146		868
Corporate alternative minimum tax credits	108		—
Foreign tax credits	—		35
Federal loss carryovers	325		398
Disallowed business interest expense carryforward	247		67
State losses and credits	224		293
Other	92		103
Total gross deferred income tax assets	2,142		1,764
Less valuation allowance	91		183
Net deferred income tax assets	2,051		1,581
Deferred income tax liabilities	$	4,376	$	3,846

The valuation allowance at December 31, 2024 and 2023 serves to reduce the available deferred income tax assets to an amount that will, more likely than not, be realized. Williams considered all available positive and negative evidence, which incorporates available tax planning strategies, and management’s estimate of future reversals of existing taxable temporary differences and has determined that a portion of its deferred income tax assets related to State losses and credits may not be realized. The change from prior year for the Foreign tax credits reflects a decrease of $35 million due to its expiration in 2024. The amounts presented in the table above are, with respect to state items, before any federal benefit. The change from prior year for the State losses and credits reflects increases in losses and credits generated in the current and prior years less losses and/or credits utilized in the current year. Williams has loss and credit carryovers in multiple state taxing jurisdictions. These attributes generally expire between 2025 and 2043 with some carryovers having indefinite carryforward periods.

Federal loss carryovers at December 31, 2024 reflect deferred tax assets on net operating loss carryovers with no expiration date.

Disallowed business interest expense carryforward reflects Williams’ federal interest expense carryforward which has no expiration date.

Cash payments for income taxes (net of refunds) were $68 million, $31 million and $13 million in 2024, 2023 and 2022 respectively.

During the second quarter of 2022, Williams finalized settlements for 2011 through 2014 on certain contested matters with the Internal Revenue Service (IRS) that resulted in a 2022 year-to-date tax benefit of approximately $45 million and Williams received cash refunds totaling $7 million. During the fourth quarter of 2023, Williams closed the audit for 2018 and made a $5 million payment.

Williams recognizes related interest and penalties as a component of Provision (benefit) for income taxes. There were no significant interest and penalties recognized for any period presented. There were no interest or penalties relating to uncertain tax positions accrued as of December 31, 2024 and December 31, 2023.

Consolidated U.S. Federal income tax returns are open to IRS examination for tax years after 2020. The statute of limitations for most states expires one year after expiration of the IRS statute.