XML 40 R21.htm IDEA: XBRL DOCUMENT v3.22.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Earnings before income taxes of $5.0 billion, $3.6 billion and $4.3 billion for fiscal years 2021, 2020 and 2019, respectively, represent earnings from domestic operations. The breakdown of income tax expense between current and deferred is as follows:
Fiscal Years
(Dollars in Millions)202120202019
Current:
Federal$827 $559 $608 
State176 123 104 
Subtotal Current$1,003 $682 $712 
Deferred:   
Federal166 149 235 
State1 31 38 
Subtotal Deferred$167 $180 $273 
Total Income Tax Expense$1,170 $862 $985 

The Company recorded a 2021 income tax benefit of $48 million primarily as a result of favorable state legislative changes, additional tax benefits associated with the vesting of share-based awards and adjustments to deferred taxes as a result of filing the 2020 state tax returns. In 2020, the Company recorded an income tax benefit of $30 million primarily as a result of the additional tax benefit associated with vesting of share-based awards and the resolution of certain tax matters. The Company recorded a 2019 income tax benefit of $77 million primarily as a result of the additional tax benefit associated with vesting of share-based awards, federal and state legislative changes, and a change in the valuation of deferred taxes as a result of filing the 2018 tax returns.

Income tax expense reconciled to the tax computed at statutory rates is presented in the following table. 
 Fiscal Years
(Dollars In Millions)202120202019
Federal Income Taxes$1,040 21.0 %$762 21.0 %$906 21.0 %
State Income Taxes139 2.8 %117 3.2 %108 2.5 %
Other(9)(0.2)%(17)(0.4)%(29)(0.7)%
Income Tax Expense/ Rate$1,170 23.6 %$862 23.8 %$985 22.8 %
    
NOTE 12.  Income Taxes, continued

    The primary factors in the change in year-end net deferred income tax liability balances include the annual provision for deferred income tax expense and accumulated other comprehensive income/loss. The significant components of deferred income tax assets and liabilities include:

 20212020
(Dollars in Millions)AssetsLiabilitiesAssetsLiabilities
Pension Plans$2 $— $62 $— 
Other Employee Benefit Plans106 — 96 — 
Accelerated Depreciation— 7,366 — 7,195 
Other497 622 320 451 
Total$605 $7,988 $478 $7,646 
Net Deferred Income Tax Liabilities $7,383  $7,168 

The Company files a consolidated federal income tax return, which includes its principal domestic subsidiaries. CSX and its subsidiaries are subject to U.S. federal income tax as well as income tax of multiple state jurisdictions. CSX participated in a contemporaneous IRS audit of tax years 2021 and 2020. Federal examinations of original federal income tax returns for all years through 2019 are resolved.

    As of December 2021 and 2020, the Company had approximately $18 million and $16 million, respectively, of total unrecognized tax benefits as a result of uncertain tax positions. Net tax benefits of $15 million and $13 million as of December 2021 and 2020, respectively, could favorably impact the effective income tax rate in each year. The Company does not expect that unrecognized tax benefits as of December 2021 for various state and federal income tax matters will significantly change over the next 12 months. The final outcome of these uncertain tax positions is not yet determinable. There were no material changes to the total gross unrecognized tax benefits and prior year audit resolutions of the Company during the fiscal year ended December 2021.
    
    CSX’s continuing practice is to recognize net interest and penalties related to income tax matters in income tax expense. Accrued interest and penalties were not material as of December 2021 or 2020. Additionally, expenses from changes to the reserves for interest and penalties were not material in 2021, 2020 or 2019