An analysis of income from continuing operations before income taxes by taxing jurisdiction is shown below:


	Years ended December 31,
	2023			2022			2021
Ireland	$	14		$	(160	)	$	673
U.S.		348			394			516
U.K.		(93	)		142			552
Rest of World		1,010			882			951
Total	$	1,279		$	1,258		$	2,692

The components of the provision for income taxes from continuing operations include:


	Years ended December 31,
	2023			2022			2021
Current tax expense:
U.S. federal taxes	$	(106	)	$	(103	)	$	(79	)
U.S. state and local taxes		(41	)		(39	)		(25	)
U.K. corporation tax		(40	)		(13	)		(33	)
Other jurisdictions		(137	)		(93	)		(303	)
Total current tax expense		(324	)		(248	)		(440	)
Deferred tax benefit/(expense):
U.S. federal taxes		20			52			(41	)
U.S. state and local taxes		15			(5	)		3
U.K. corporation tax		63			(7	)		(65	)
Other jurisdictions		11			14			7
Total deferred tax benefit/(expense)		109			54			(96	)
Total provision for income taxes	$	(215	)	$	(194	)	$	(536	)

The reported provision for income taxes differs from the amounts that would have resulted had the reported income from continuing operations before income taxes been taxed at the U.S. federal statutory rate. The principal reasons for the differences between the amounts provided and those that would have resulted from the application of the U.S. federal statutory tax rate are as follows:


	Years ended December 31,
	2023			2022			2021
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	$	1,279		$	1,258		$	2,692
U.S. federal statutory income tax rate		21	%		21	%		21	%
Income tax expense at U.S. federal tax rate		(269	)		(264	)		(565	)
Adjustments to derive effective tax rate:
Non-deductible expenses and dividends		(24	)		(19	)		(15	)
Net adjustments on acquisition costs		(1	)		(4	)		13
Impact of change in rate on deferred tax balances		10			(1	)		(36	)
Effect of foreign exchange and other differences		1			28			—
Changes in valuation allowances		(2	)		1			2
Net tax effect on intra-group items		94			84			84
Net tax effect on disposal of operations		6			1			62
Tax differentials of non-U.S. jurisdictions		8			20			(24	)
Impact of U.S. state and local taxes		(26	)		(42	)		(23	)
Global Intangible Low-Taxed Income (GILTI)		(9	)		(10	)		(4	)
Subpart F income		(5	)		(6	)		(6	)
Base Erosion Anti-Abuse Tax (BEAT)		13			24			(22	)
Tax on unremitted earnings		(12	)		(14	)		—
Other items, net		1			8			(2	)
Provision for income taxes	$	(215	)	$	(194	)	$	(536	)

The current year effective tax rate includes a $20 million tax benefit related to changes in state apportionment and a $10 million deferred tax benefit related to the remeasurement of deferred tax assets and liabilities associated with the enactment of the Bermuda corporate income tax law. The effective tax rate for the year ended December 31, 2022 includes a $34 million tax benefit associated with amending the Company’s U.S. federal income tax returns for tax years 2019 and 2020, primarily related to a reduction in Base Erosion and Anti Abuse Tax (‘BEAT’), and a $22 million income tax benefit associated with foreign exchange remeasurement on income tax account balances. The effective tax rate for the year ended December 31, 2021 includes a $250 million estimated tax expense related to the income receipt related to the Aon transaction termination and a $40 million tax expense related to the remeasurement of deferred tax assets and liabilities associated with an increase in the U.K. tax rate from 19% to 25%.

Willis Towers Watson plc is a non-trading holding company tax resident in Ireland where it is taxed at the statutory rate of 25%. The provisions for income tax on operations have been reconciled above to the U.S. federal statutory tax rate of 21% due to significant operations in the U.S.

Deferred income tax assets and liabilities reflect the effect of temporary differences between the assets and liabilities recognized for financial reporting purposes and the amounts recognized for income tax purposes. We recognize deferred tax assets if it is more likely than not that a benefit will be realized.

Deferred income tax assets and liabilities included in the consolidated balance sheets at December 31, 2023 and 2022 are comprised of the following:


	December 31,
	2023			2022
Deferred tax assets:
Accrued expenses not currently deductible	$	76		$	69
Interest carryforwards		276			174
Net operating losses		44			44
Capital loss carryforwards		1			1
Accrued retirement benefits		150			85
Operating lease liabilities		120			125
Deferred compensation		93			97
Share-based compensation		25			18
Financial derivative transactions		2			4
Gross deferred tax assets		787			617
Less: valuation allowance		(35	)		(28	)
Net deferred tax assets	$	752		$	589
Deferred tax liabilities:
Cost of intangible assets, net of related amortization	$	604		$	679
Operating lease right-of-use assets		103			106
Cost of tangible assets, net of related depreciation		24			44
Prepaid retirement benefits		129			142
Accrued revenue not currently taxable		319			262
Unremitted earnings		29			36
Deferred tax liabilities	$	1,208		$	1,269
Net deferred tax liabilities	$	456		$	680

The net deferred income tax assets are included in Other non-current assets and the net deferred tax liabilities are included in Deferred tax liabilities in our consolidated balance sheets.


	December 31,
	2023		2022
Balance sheet classifications:
Other non-current assets	$	86	$	68
Deferred tax liabilities		542		748
Net deferred tax liability	$	456	$	680

At December 31, 2023, we had U.S. federal and non-U.S. net operating loss carryforwards amounting to $116 million of which $72 million can be indefinitely carried forward under local statutes. The remaining $44 million of net operating loss carryforwards will expire, if unused, in varying amounts from 2024 through 2043. In addition, we had U.S. state net operating loss carryforwards of $419 million, of which $21 million can be indefinitely carried forward, while the remaining $398 million will expire in varying amounts from 2024 to 2043.

Management believes, based on the evaluation of positive and negative evidence, including the future reversal of existing taxable temporary differences, it is more likely than not that the Company will realize the benefits of net deferred tax assets of $752 million, net of the valuation allowance. During 2023, the Company increased its valuation allowance by $7 million, primarily related to state net operating losses and U.S. foreign tax credits. During 2022, the Company decreased its valuation allowance by $14 million, primarily related to certain state net operating losses. The Company determined the losses and the related valuation allowance would never be realized. During 2021, the Company decreased its valuation allowance by $42 million, primarily related to the disposal of underlying positions which were part of the divestment of Miller. In addition, part of the decrease reflected the utilization of the U.K. capital loss carryforward, the benefit of which was recorded in discontinued operations.

At December 31, 2023 and 2022, the Company had valuation allowances of $35 million and $28 million, respectively, to reduce its deferred tax assets to their estimated realizable values. The valuation allowance at December 31, 2023 primarily relates to deferred taxes on U.S. state and non-U.S. net operating losses of $12 million and $13 million, respectively.

An analysis of our valuation allowance is shown below.


	Years ended December 31,
	2023			2022			2021
Balance at beginning of year	$	28		$	42		$	84
Additions charged to costs and expenses		10			8			3
Deductions		(3	)		(22	)		(45	)
Balance at end of year	$	35		$	28		$	42

The movement in the 2023 valuation allowance differs from the 2023 rate reconciliation primarily due to the increase in state net operating losses and the related valuation allowance. The movement in the prior-year valuation allowance differs from the 2022 rate reconciliation primarily due to the write-down of state net operating losses and the related valuation allowance. In addition, 2022 and 2021 valuation allowances differ from the 2022 and 2021 rate reconciliations, respectively, as part of the tax benefits were allocated to discontinued operations.

The Company recognizes deferred tax balances related to the undistributed earnings of subsidiaries when it expects that it will recover those undistributed earnings in a taxable manner, such as through receipt of dividends or sale of the investments. At December 31, 2023 the Company has $17.9 billion of undistributed earnings in subsidiaries where no deferred tax has been recognized. Of this amount $10.3 billion relates to earnings which have been reinvested indefinitely and $7.6 billion relates to earnings identified as being recoverable in an untaxable manner. It is not practicable to calculate the tax cost of repatriating the unremitted earnings which have been reinvested indefinitely. If future events, including material changes in estimates of cash, working capital and long-term investment requirements necessitate that these earnings be distributed, an additional provision for income and foreign withholding taxes, net of credits, may be necessary.

At December 31, 2023, the amount of unrecognized tax benefits associated with uncertain tax positions, determined in accordance with ASC Subtopic 740-10, excluding interest and penalties, was $51 million. A reconciliation of the beginning and ending balances of the liability for unrecognized tax benefits is as follows:


	2023			2022			2021
Balance at beginning of year	$	47		$	43		$	50
Increases related to tax positions in prior years		13			16			—
Decreases related to tax positions in prior years		(9	)		(2	)		—
Increases related to tax positions in current year		3			—			—
Decreases related to settlements		—			(1	)		—
Decreases related to lapse in statute of limitations		(4	)		(6	)		(6	)
Cumulative translation adjustment and other adjustments		1			(3	)		(1	)
Balance at end of year	$	51		$	47		$	43

The liability for unrecognized tax benefits for each of the years ended December 31, 2023, 2022 and 2021 can be reduced by $3 million using offsetting deferred tax benefits associated with timing differences, foreign tax credits and the federal tax benefit of state income taxes. If these offsetting deferred tax benefits were recognized, there would be a favorable impact on our effective tax rate. There are no material balances that would result in adjustments to other tax accounts.

Interest and penalties related to unrecognized tax benefits are included as a component of income tax expense. At December 31, 2023, and 2022, we had cumulative accrued interest of $6 million and $5 million, respectively. Accrued penalties were immaterial in 2023 and 2022.

Tax expense allocated to continuing operations for both the years ended December 31, 2023 and 2022 includes $1 million of interest expense.

The Company believes that the outcomes which are reasonably possible within the next 12 months may result in a reduction in the liability for unrecognized tax benefits in the range of $1 million to $2 million, excluding interest and penalties.

The Company and its subsidiaries file income tax returns in various tax jurisdictions in which it operates.

We have ongoing state income tax examinations in certain states for tax years ranging from December 31, 2015 to December 31, 2021. The statute of limitations in certain states remains open back to the tax period ended December 31, 2015.

All U.K. tax returns have been filed timely and are in the normal process of being reviewed by His Majesty’s Revenue & Customs. The Company is not currently subject to any material examinations in other jurisdictions. A summary of the tax years that remain open to tax examination in our major tax jurisdictions are as follows: