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Taxes on Income
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Taxes on Income Taxes on Income
Income before taxes on income resulting from domestic and foreign operations is as follows:
(in millions)Year Ended December 31,
 202120202019
Domestic operations$2,874 $2,226 $2,068 
Foreign operations1,290 1,002 862 
Total income before taxes$4,164 $3,228 $2,930 

The provision for taxes on income consists of the following:
(in millions)Year Ended December 31,
 202120202019
Federal:
Current$438 $349 $303 
Deferred(9)1 13 
Total federal429 350 316 
Foreign:
Current295 246 201 
Deferred23 (9)14 
Total foreign318 237 215 
State and local:
Current153 111 93 
Deferred1 (4)3 
Total state and local154 107 96 
Total provision for taxes $901 $694 $627 

A reconciliation of the U.S. federal statutory income tax rate to our effective income tax rate for financial reporting purposes is as follows:
 
Year Ended December 31,
 202120202019
U.S. federal statutory income tax rate21.0 %21.0 %21.0 %
State and local income taxes3.3 3.0 2.6 
Foreign operations(0.2)(0.3)(0.3)
Stock-based compensation(0.8)(0.7)(1.4)
S&P Dow Jones Indices LLC joint venture(1.1)(1.2)(1.2)
Tax credits and incentives(2.3)(2.2)(1.7)
Other, net1.7 1.9 2.4 
Effective income tax rate 21.6 %21.5 %21.4 %

The increase in the effective income tax rate in 2021 was primarily due to a change in the mix of income by jurisdiction. The increase in the effective income tax rate in 2020 was primarily due to a decrease in the recognition of excess tax benefits associated with share-based payments in the statement of income.

We have elected to recognize the tax on Global Intangible Low Taxed Income (“GILTI”) as a period expense in the year the tax is incurred. GILTI expense is included in Other, net above.
The principal temporary differences between the accounting for income and expenses for financial reporting and income tax purposes are as follows: 
(in millions)December 31,
20212020
Deferred tax assets:
Employee compensation$57 $64 
Accrued expenses54 41 
Postretirement benefits28 12 
Unearned revenue74 28 
Forward exchange contracts 71 — 
Loss carryforwards204 217 
Lease liabilities142 186 
Other32 53 
Total deferred tax assets662 601 
Deferred tax liabilities:
Goodwill and intangible assets(394)(347)
Right of use asset(101)(138)
Postretirement benefits(46)— 
Fixed assets(6)(7)
Total deferred tax liabilities(547)(492)
Net deferred income tax asset before valuation allowance115 109 
Valuation allowance(206)(219)
Net deferred income tax liability$(91)$(110)
Reported as:
Non-current deferred tax assets$56 $67 
Non-current deferred tax liabilities(147)(177)
Net deferred income tax liability$(91)$(110)

We record valuation allowances against deferred income tax assets when we determine that it is more likely than not that such deferred income tax assets will not be realized based upon all the available evidence. The valuation allowance is primarily related to operating losses.

As of December 31, 2021, we have approximately $2.9 billion of undistributed earnings of our foreign subsidiaries, of which $0.8 billion is reinvested indefinitely in our foreign operations. We have not recorded deferred income taxes applicable to undistributed earnings of foreign subsidiaries that are indefinitely reinvested in foreign operations. Quantification of the deferred tax liability, if any, associated with indefinitely reinvested earnings is not practicable.

We made net income tax payments totaling $883 million in 2021, $683 million in 2020, and $659 million in 2019. As of December 31, 2021, we had net operating loss carryforwards of $761 million, of which a significant portion has an unlimited carryover period under current law.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
(in millions)Year ended December 31,
 202120202019
Balance at beginning of year$121 $124 $147 
Additions based on tax positions related to the current year35 24 21 
Additions for tax positions of prior years9 1 11 
Reduction for tax positions of prior years— (13)(15)
Reduction for settlements(8)(4)(33)
Expiration of applicable statutes of limitations(10)(11)(7)
Balance at end of year$147 $121 $124 

The total amount of federal, state and local, and foreign unrecognized tax benefits as of December 31, 2021, 2020 and 2019 was $147 million, $121 million and $124 million, respectively, exclusive of interest and penalties. During the year ended December 31, 2021, the change in unrecognized tax benefits resulted in a net increase of tax expense of $31 million.

We recognize accrued interest and penalties related to unrecognized tax benefits in interest expense and operating-related expense, respectively. Based on the current status of income tax audits, we believe that the total amount of unrecognized tax benefits on the balance sheet may be reduced by up to approximately $16 million in the next twelve months as a result of the resolution of local tax examinations. In addition to the unrecognized tax benefits, we had $24 million as of both December 31, 2021 and 2020 of accrued interest and penalties associated with unrecognized tax benefits.

The U.S. federal income tax audits for 2017 through 2021 are in process. During 2021, we completed state and foreign tax audits and, with few exceptions, we are no longer subject to federal, state, or foreign income tax examinations by tax authorities for the years before 2013. The impact to tax expense in 2021, 2020 and 2019 was not material.
We file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions, and we are routinely under audit by many different tax authorities. We believe that our accrual for tax liabilities is adequate for all open audit years based on an assessment of many factors including past experience and interpretations of tax law. This assessment relies on estimates and assumptions and may involve a series of complex judgments about future events. It is possible that tax examinations will be settled prior to December 31, 2022. If any of these tax audit settlements do occur within that period, we would make any necessary adjustments to the accrual for unrecognized tax benefits.