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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
Significant components of Delek's continuing operations deferred tax assets (liabilities) reported in the accompanying consolidated financial statements as of December 31, 2024 and 2023 were as follows (in millions):
December 31,
20242023
Non-Current Deferred Taxes:
Property, plant and equipment, and intangibles$(237.4)$(266.2)
Right-of-use asset(23.7)(32.8)
Partnership and equity investments(188.2)(196.7)
Total deferred tax liabilities(449.3)(495.7)
Interest expense limitation under 163j112.7 71.6 
Compensation and employee benefits10.3 16.6 
Net operating loss carryforwards134.8 125.7 
Tax credit carryforwards11.3 5.8 
Deferred revenues15.7 18.7 
Lease obligation27.7 37.7 
Reserves and accruals10.5 34.7 
Derivatives and hedging0.8 1.4 
Inventories1.0 2.7 
Other(3.8)— 
Total deferred tax assets321.0 314.9 
Valuation allowance(86.5)(83.3)
Total net deferred tax liabilities
$(214.8)$(264.1)
The difference between the actual income tax expense and the tax expense computed by applying the statutory federal income tax rate to income was attributable to the following (in millions):
Year Ended December 31,
202420232022
Provision (benefit) for federal income taxes at statutory rate$(148.2)$3.5 $67.6 
State income tax benefit, net of federal tax provision(3.9)(3.9)(15.7)
Income tax benefit attributable to non-controlling interest(8.6)(6.4)(7.2)
Tax credits and incentives (1)
(4.7)(9.6)(6.9)
Non-deductible goodwill44.6 — — 
Changes in valuation allowance3.2 10.3 14.0 
Revaluation related to state legislative changes0.7 (2.5)— 
Impact of stock compensation2.5 1.6 0.9 
Impact of officer's compensation1.7 3.2 3.2 
Other items4.8 0.8 0.5 
Income tax expense (benefit)$(107.9)$(3.0)$56.4 
(1)     Tax credits and incentives include work opportunity and research and development credits, as well as incentives for the Company’s biodiesel blending operations.
Income tax expense (benefit) was as follows (in millions):
Year Ended December 31,
202420232022
Current$(4.3)$(1.4)$(5.2)
Deferred(103.6)(1.6)61.6 
$(107.9)$(3.0)$56.4 
We carry valuation allowances against certain state deferred tax assets and net operating losses that may not be recoverable with future taxable income. We also carry valuation allowances related to basis differences that may not be recoverable. During the years ended December
31, 2024 and 2023, we recorded an increase to the valuation allowance of $3.2 million and $10.3 million, respectively. The 2024 and 2023 increase in the valuation allowance was primarily driven by changes in state attributes.
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods for which the deferred tax assets are deductible, management believes it is more likely than not Delek will realize the benefits of these deductible differences, net of the existing valuation allowance. The amount of the deferred tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced. Subsequently recognized tax benefit or expense relating to the valuation allowance for deferred tax assets will be reported as an income tax benefit or expense in the consolidated statement of income.
Federal net operating loss and credit carryforwards at December 31, 2024 totaled $241.8 million and $7.2 million, respectively, a portion of which are subject to a valuation allowance. Federal net operating losses have an indefinite carryforward life, and federal tax credit carryforwards will begin expiring in 2028. State net operating loss and credit carryforwards at December 31, 2024 totaled $1,871.2 million and $4.5 million, respectively, a portion of which are subject to a valuation allowance. State net operating losses and tax credit carryforwards will begin expiring in 2025.
Delek files a consolidated U.S. federal income tax return, as well as income tax returns in various state jurisdictions. Delek is no longer subject to U.S. federal income tax examinations by tax authorities for years through 2017. Pre-acquisition tax returns for Alon are closed for U.S. federal income tax examinations through the tax year ended December 31, 2016 as of December 31, 2024. On February 13, 2024, the Company received notice that the Congressional Joint Committee has completed its consideration of both Delek and Alon's income tax returns for 2015-2020 with no material adjustments identified, this includes the Alon June 30, 2017 tax return. Alon USA Partners, LP is currently under audit by the IRS for tax year 2019. Delek is currently under audit in various states for tax years 2016 through 2019. No material adjustments have been identified at this time.
ASC 740 provides a recognition threshold and guidance for measurement of income tax positions taken or expected to be taken on a tax return. ASC 740 requires the elimination of the income tax benefits associated with any income tax position where it is not "more likely than not" that the position would be sustained upon examination by the taxing authorities.
Increases and decreases to unrecognized tax benefits, which includes interest and penalties, were as follows (in millions):
Year Ended December 31,
202420232022
Balance at the beginning of the year$10.9 $7.0 $14.1 
Additions based on tax positions related to current year0.2 4.3 0.9 
Additions for tax positions related to prior years and acquisitions0.4 0.2 0.1 
Reductions for tax positions related to prior years(0.1)(0.2)(6.5)
Reductions for tax positions related to lapse of applicable statute of limitations(4.5)(0.4)(0.4)
Reductions for tax positions related to settlements with taxing authorities— — (1.2)
Balance at the end of the year$6.9 $10.9 $7.0 
The amount of the unrecognized benefit above, that if recognized would change the effective tax rate, is $6.0 million and $6.1 million as of December 31, 2024 and 2023, respectively. The Company expects none of the 2024 ending reserve to no longer be uncertain and rolled out of the reserve within the next twelve months.
Delek recognizes accrued interest and penalties related to unrecognized tax benefits as an adjustment to the current provision for income taxes. We recognized interest expense of $0.2 million, $0.2 million, and $0.1 million related to unrecognized tax benefits during the years ended December 31, 2024, 2023 and 2022, respectively. The total recognized liability for interest was $1.3 million and $1.3 million as of December 31, 2024 and 2023, respectively. Uncertain tax positions have been examined by Delek for any material changes in the next 12 months, and no material changes are expected.