Income Taxes

9 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

(5) INCOME TAXES

We evaluate and update our annual effective income tax rate on a quarterly basis based on current and forecasted operating results and tax laws. Consequently, based upon the mix and timing of our actual earnings compared to annual projections, our effective tax rate may vary quarterly and may make comparisons not meaningful. The effective income tax rate is influenced by a variety of factors including geographic sources and relative magnitude of these sources of income. Income taxes for discrete items are computed and recorded in the period that a specific transaction occurs. For three months and nine months ended September 30, 2022 and 2021, our overall effective tax rate was different than the federal statutory rate due primarily to state income taxes, equity compensation, valuation allowances and other tax items. Current income taxes reflect estimated state income taxes due for 2022 which is based on our estimated earnings, taking into account state tax rates and laws regarding NOL limitations. We continue to evaluate the realizability of federal and state deferred tax assets and based upon significant increases in commodity prices and other positive evidence, we released a portion of our federal and state valuation allowances in first nine months 2022. On July 12, 2022, the Commonwealth of Pennsylvania enacted legislation to reduce the corporate income tax rate from 9.99% to 8.99% in 2023 and continue to reduce that rate by 0.5% per year beginning in 2024 and declining to 4.99% in 2031 and thereafter. We have evaluated the impact of this new corporate income tax rate and in third quarter 2022, we recorded a $20.7 million tax benefit.