DTE Energy files a consolidated federal income tax return. DTE Electric is a part of the consolidated federal income tax return of DTE Energy. DTE Energy and its subsidiaries file consolidated and/or separate company income tax returns in various states and localities, including a consolidated return in the State of Michigan. DTE Electric is part of the Michigan consolidated income tax return of DTE Energy. The federal, state and local income tax expense for DTE Electric is determined on an individual company basis with no allocation of tax expenses or benefits from other affiliates of DTE Energy. DTE Electric had income tax receivables with DTE Energy of $8 million and $14 million at December 31, 2020 and 2019, respectively.


	2020			2019			2018
DTE Energy	(In millions)
Income Before Income Taxes	$	1,538		$	1,324		$	1,216
Income tax expense at 21% statutory rate	$	323		$	278		$	255
State and local income taxes, net of federal benefit	81			48			60
Production tax credits	(121)			(128)			(223)
TCJA regulatory liability amortization	(76)			(38)			—
Net operating loss carryback	(34)			—			—
AFUDC equity	(4)			(4)			(14)
Employee Stock Ownership Plan dividends	(4)			(3)			(3)
Investment tax credits	(4)			(4)			(4)
Stock based compensation	(3)			(7)			(3)
Enactment of the Tax Cuts and Jobs Act	—			—			21
Noncontrolling interests	1			—			2
Depreciation	2			2			2
Other, net	6			8			5
Income Tax Expense	$	167		$	152		$	98
Effective income tax rate	10.9		%	11.5		%	8.1		%


	2020			2019			2018
DTE Electric	(In millions)
Income Before Income Taxes	$	887		$	854		$	857
Income tax expense at 21% statutory rate	$	186		$	179		$	180
State and local income taxes, net of federal benefit	50			49			49
TCJA regulatory liability amortization	(62)			(35)			—
Production tax credits	(55)			(45)			(35)
Investment tax credits	(4)			(4)			(3)
AFUDC equity	(4)			(4)			(3)
Employee Stock Ownership Plan dividends	(2)			(2)			(2)


Enactment of the Tax Cuts and Jobs Act	—			—			7
Depreciation	2			2			2
Other, net	(2)			(2)			(2)
Income Tax Expense	$	109		$	138		$	193
Effective income tax rate	12.3		%	16.2		%	22.5		%


	2020		2019		2018
DTE Energy	(In millions)
Current income tax expense (benefit)
Federal	$	(247)	$	(184)	$	(17)
State and other income tax	7		7		1
Total current income taxes	(240)		(177)		(16)
Deferred income tax expense
Federal	310		275		38
State and other income tax	97		54		76
Total deferred income taxes	407		329		114


	$	167	$	152	$	98


	2020		2019		2018
DTE Electric	(In millions)
Current income tax expense
Federal	$	15	$	25	$	—
State and other income tax	5		16		4
Total current income taxes	20		41		4
Deferred income tax expense
Federal	30		51		131
State and other income tax	59		46		58
Total deferred income taxes	89		97		189


	$	109	$	138	$	193

Deferred tax assets and liabilities are recognized for the estimated future tax effect of temporary differences between the tax basis of assets or liabilities and the reported amounts in the Registrant's Consolidated Financial Statements. Consistent with the original establishment of these deferred tax liabilities (assets), recognition of these non-cash transactions are not reflected in the Consolidated Statements of Cash Flows.


	DTE Energy				DTE Electric
	2020		2019		2020		2019
	(In millions)
Property, plant, and equipment	$	(4,032)	$	(3,755)	$	(3,099)	$	(2,956)
Regulatory assets and liabilities	(108)		(47)		(53)		4
Tax credit carry-forwards	1,144		1,161		278		252
Pension and benefits	321		300		264		258
Federal net operating loss carry-forward	265		276		—		—


State and local net operating loss carry-forwards	155		117		—		—
Investments in equity method investees	(667)		(465)		—		—
Other	141		138		85		87
	(2,781)		(2,275)		(2,525)		(2,355)
Less valuation allowance	(41)		(40)		—		—
Long-term deferred income tax liabilities	$	(2,822)	$	(2,315)	$	(2,525)	$	(2,355)

Deferred income tax assets	$	2,241	$	2,264	$	883	$	865
Deferred income tax liabilities	(5,063)		(4,579)		(3,408)		(3,220)
	$	(2,822)	$	(2,315)	$	(2,525)	$	(2,355)

Tax credit carry-forwards for DTE Energy include $1.1 billion of general business credits that expire from 2032 through 2040. No valuation allowance is required for the tax credits carry-forward deferred tax asset.

DTE Energy has a pre-tax federal net operating loss carry-forward of $1.3 billion as of December 31, 2020. The net operating loss carry-forwards generated in 2015 and 2016 will expire from 2035 through 2036, and the net operating loss carry-forward generated in 2018 and subsequent years will be carried forward indefinitely. No valuation allowance is required for the federal net operating loss deferred tax asset.

DTE Energy has state and local deferred tax assets related to net operating loss carry-forwards of $155 million and $117 million at December 31, 2020 and 2019, respectively. The state and local net operating loss carry-forwards expire from 2021 through 2040. DTE Energy has recorded valuation allowances at December 31, 2020 and 2019 of approximately $41 million and $40 million, respectively, which are primarily related to these deferred tax assets. In assessing the realizability of deferred tax assets, DTE Energy considers whether it is more likely than not that some portion or all of the deferred tax assets will not 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.

Tax credit carry-forwards for DTE Electric include $278 million of general business credits that expire from 2036 through 2040. No valuation allowance is required for the tax credits carry-forward deferred tax asset.

The above tables exclude unamortized investment tax credits that are shown separately on the Registrants' Consolidated Statements of Financial Position. Investment tax credits are deferred and amortized to income over the average life of the related property.

To assist individuals and employers with the impacts of the COVID-19 pandemic, the CARES Act was signed into law in March 2020. The CARES Act included certain tax relief provisions applicable to the Registrants including a) the immediate refund of the corporate AMT credit, b) the ability to carryback net operating losses five years for tax years 2018 through 2020, c) the employee retention credit, and d) delayed payment of employer payroll taxes.

As a result of these provisions, DTE Energy received $220 million of refunds from the U.S. Treasury during the year ended December 31, 2020, including $153 million for the immediate refund of the 2018 remaining AMT credit balance and $67 million as a result of carrying back the 2018 net operating loss to 2013.

In addition, the carryback of the 2018 net operating loss to 2013 resulted in a $34 million reduction in Income Tax Expense for the year ended December 31, 2020 due primarily to the difference in rates between the two years (35% in 2013 and 21% in 2018).

During the second quarter 2020, the Registrants filed a claim for employee retention credits of $6 million, of which $3 million is attributable to DTE Electric. These amounts are included in Taxes other than income in the Consolidated Statements of Operations for the year ended December 31, 2020. The Registrants have also deferred employer payroll taxes of $44 million, of which $23 million is attributable to DTE Electric, increasing the amount of Current Liabilities - Other and Other Liabilities - Other on the Registrants' Consolidated Statements of Financial Position as of December 31, 2020.


	2020		2019		2018
DTE Energy	(In millions)
Balance at January 1	$	10	$	10	$	10
Additions for tax positions of prior years	—		—		—




Balance at December 31	$	10	$	10	$	10


	2020		2019		2018
DTE Electric	(In millions)
Balance at January 1	$	13	$	13	$	13
Additions for tax positions of prior years	—		—		—




Balance at December 31	$	13	$	13	$	13

DTE Energy had $8 million of unrecognized tax benefits at December 31, 2020 and 2019 that, if recognized, would favorably impact its effective tax rate. DTE Electric had $10 million of unrecognized tax benefits at December 31, 2020 and 2019 that, if recognized, would favorably impact its effective tax rate. The Registrants do not anticipate any material decrease in unrecognized tax benefits in the next twelve months.

The Registrants recognize interest and penalties pertaining to income taxes in Interest expense and Other expenses, respectively, on their Consolidated Statements of Operations.

Accrued interest pertaining to income taxes for DTE Energy totaled $5 million and $4 million at December 31, 2020 and 2019, respectively. DTE Energy recognized interest expense related to income taxes of $1 million in 2020, 2019, and 2018. DTE Energy has not accrued any penalties pertaining to income taxes.

Accrued interest pertaining to income taxes for DTE Electric totaled $6 million at December 31, 2020 and 2019. DTE Electric recognized interest expense related to income taxes of a nominal amount in 2020 and $1 million in 2019 and 2018. DTE Electric has not accrued any penalties pertaining to income taxes.

In 2020, DTE Energy, including DTE Electric, settled a federal tax audit for the 2018 tax year. DTE Energy's federal income tax returns for 2019 and subsequent years remain subject to examination by the IRS. DTE Energy's Michigan Business Tax returns for the years 2008-2011 and Michigan Corporate Income Tax returns for the year 2015 and subsequent years remain subject to examination by the State of Michigan. DTE Energy also files tax returns in numerous state and local jurisdictions with varying statutes of limitation.