Income Taxes (Tables)

12 Months Ended

Dec. 31, 2024

Federal and foreign income tax expense consisted of the following:


	Year Ended December 31
$ in millions	2024		2023		2022
Federal income tax expense:
Current	$	628	$	949	$	1,289
Deferred	204		(670)		(353)
Total federal income tax expense	832		279		936
Foreign income tax expense:
Current	13		15		3
Deferred	(3)		(4)		1
Total foreign income tax expense	10		11		4
Total federal and foreign income tax expense	$	842	$	290	$	940

Income tax reconciliation

Income tax expense differs from the amount computed by multiplying earnings before income taxes by the statutory federal income tax rate due to the following:


	Year Ended December 31
$ in millions	2024				2023				2022
Income tax expense at statutory rate	$	1,053	21.0	%	$	493	21.0	%	$	1,226	21.0	%
Research credit	(361)		(7.2)		(210)		(8.9)		(177)		(3.0)
Foreign derived intangible income	13		0.3		(63)		(2.7)		(66)		(1.1)
Settlements with taxing authorities	—		—		(1)		—		(86)		(1.5)
Net interest expense	145		2.9		69		2.9		22		0.4


Other, net	(8)		(0.2)		2		0.1		21		0.3
Total federal and foreign income taxes	$	842	16.8	%	$	290	12.4	%	$	940	16.1	%

Unrecognized tax benefit rollforward

The company’s unrecognized tax benefits, excluding accrued interest and penalties of $373 million, $305 million and $216 million as of December 31, 2024, 2023 and 2022, respectively, are presented below:


	December 31
$ in millions	2024		2023		2022
Unrecognized tax benefits at beginning of the year	$	1,994	$	1,663	$	1,630
Additions based on tax positions related to the current year	236		276		262
Additions for tax positions of prior years	90		254		6
Reductions for tax positions of prior years	(106)		(9)		(124)
Settlements with taxing authorities	(766)		(189)		(110)
Other, net	(1)		(1)		(1)
Net change in unrecognized tax benefits	(547)		331		33
Unrecognized tax benefits at end of the year	$	1,447	$	1,994	$	1,663

Components of deferred tax assets and liabilities

The tax effects of temporary differences and carryforwards that gave rise to year-end deferred federal, state and foreign tax balances, as presented in the consolidated statements of financial position, are as follows:


	December 31
$ in millions	2024		2023
Deferred Tax Assets
Retiree benefits	$	—	$	115
Capitalized research and experimental expenditures	4,816		3,380
Accrued employee compensation	386		400
Provisions for accrued liabilities	468		509
Inventory	36		279
Stock-based compensation	37		35
Operating lease liabilities	557		575
Tax credits	562		557
Other	241		215
Gross deferred tax assets	7,103		6,065
Less: valuation allowance	(526)		(517)
Net deferred tax assets	6,577		5,548
Deferred Tax Liabilities
Retiree benefits	153		—
Goodwill	534		534
Purchased intangibles	69		83
Property, plant and equipment, net	827		805
Operating lease right-of-use assets	554		563
Contract accounting differences	2,714		2,437
Other	127		106
Deferred tax liabilities	4,978		4,528
Total net deferred tax assets	$	1,599	$	1,020