Income Taxes (Tables)

12 Months Ended

Dec. 31, 2023

The components of income tax expense for the years ended December 31 included in the Consolidated Statements of Income were as follows:


(Millions)	2023		2022		2021
Current income tax expense:
U.S. federal	$	2,455	$	2,445	$	1,656
U.S. state and local	351		339		351
Non-U.S.	662		476		328
Total current income tax expense	3,468		3,260		2,335
Deferred income tax (benefit) expense:
U.S. federal	(952)		(763)		231
U.S. state and local	(139)		(117)		22
Non-U.S.	(238)		(309)		41
Total deferred income tax (benefit) expense	(1,329)		(1,189)		294
Total income tax expense	$	2,139	$	2,071	$	2,629

Effective income tax rate reconciliation

A reconciliation of the U.S. federal statutory rate of 21 percent as of December 31, 2023, 2022 and 2021, to our actual income tax rate was as follows:


	2023		2022		2021
U.S. statutory federal income tax rate	21.0	%	21.0	%	21.0	%
(Decrease) increase in taxes resulting from:
Tax credits and tax-exempt income	(0.7)		(0.9)		(0.1)
State and local income taxes, net of federal benefit	2.4		3.1		3.0
Non-U.S. subsidiaries’ earnings (a)	(0.8)		(0.1)		1.1
Tax settlements and lapse of statute of limitations	(2.0)		(2.1)		(0.3)


Valuation allowances	0.1		(0.1)		—
Other	0.3		0.7		(0.1)
Actual tax rates	20.3	%	21.6	%	24.6	%

(a)In certain jurisdictions outside the United States, we benefit from agreements that temporarily lower our income tax expense. The impact of these agreements was not material to our Consolidated Statements of Income.

Components of deferred tax assets and liabilities

The significant components of deferred tax assets and liabilities as of December 31 are reflected in the following table:


(Millions)	2023		2022
Deferred tax assets:
Reserves not yet deducted for tax purposes	$	4,552	$	4,052
Employee compensation and benefits	335		353
Net operating loss and tax credit carryforwards	466		411
Capitalized developed software	743		—
Other	723		776
Gross deferred tax assets	6,819		5,592
Valuation allowance	(614)		(537)
Deferred tax assets after valuation allowance	6,205		5,055
Deferred tax liabilities:
Intangibles and fixed assets	683		671
Deferred revenue	62		126
Deferred interest	114		118
Investment in joint ventures	—		17
Other	566		618
Gross deferred tax liabilities	1,425		1,550
Net deferred tax assets	$	4,780	$	3,505

Changes in unrecognized tax benefits

The following table presents changes in unrecognized tax benefits:


(Millions)	2023		2022		2021
Balance, January 1	$	962	$	1,024	$	790
Increases:
Current year tax positions	132		119		64
Tax positions related to prior years	40		30		225

Decreases:
Tax positions related to prior years	(50)		(30)		(14)
Settlements with tax authorities	(160)		(74)		(15)
Lapse of statute of limitations	(49)		(104)		(17)
Effects of foreign currency translations	—		(3)		(9)
Balance, December 31	$	875	$	962	$	1,024