Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Total income tax expense from operations differs from the amount computed by applying the statutory federal income tax rate to income before income tax expense.

Effective income tax rate for years ended Dec. 31:

	2024		2023		2022
Federal statutory rate	21.0	%	21.0	%	21.0	%
State income tax on pretax income, net of federal tax effect	4.8		4.9		4.9
(Decreases) increases in tax from:
PTCs (a)	(43.2)		(28.1)		(27.4)
Plant regulatory differences (b)	(7.3)		(5.6)		(5.5)
Other tax credits, net NOL & tax credit allowances	(1.3)		(1.3)		(1.3)
Other, net	(0.2)		0.1		(0.1)
Effective income tax rate	(26.2)	%	(9.0)	%	(8.4)	%

(a)Wind, Solar and Nuclear PTCs (net of estimated transfer discounts) are generally credited to customers (reduction to revenue) and do not materially impact earnings. Nuclear PTCs, newly available in 2024, resulted in benefits of 11.3% to the ETR for the year ended Dec. 31, 2024.

(b)Plant regulatory differences primarily relate to the credit of excess deferred taxes to customers through the average rate assumption method. Income tax benefits associated with the credit are offset by corresponding revenue reductions.

Components of income tax expense for years ended Dec. 31:

(Millions of Dollars)	2024		2023		2022
Current federal tax expense	$	36	$	113	$	1
Current state tax expense	28		16		3
Current change in unrecognized tax expense (benefit)	2		(21)		5
Deferred federal tax benefit	(510)		(331)		(239)
Deferred state tax expense	46		75		96
Deferred change in unrecognized tax expense	—		7		3
Deferred ITCs	(4)		(5)		(4)
Total income tax benefit	$	(402)	$	(146)	$	(135)

Components of deferred income tax expense as of Dec. 31:

(Millions of Dollars)	2024		2023		2022
Deferred tax expense (benefit) excluding items below	$	434	$	129	$	(138)
Adjustments to deferred income taxes for tax credit cash transfers (a)	(689)		(190)		—
Amortization and adjustments to deferred income taxes on income tax regulatory assets and liabilities	(201)		(188)		8
Tax expense allocated to other comprehensive income and other	(8)		—		(10)
Deferred tax benefit	$	(464)	$	(249)	$	(140)

(a)Proceeds from tax credit transfers are included in cash received (paid) for income taxes in the consolidated statement of cash flows.

Components of net deferred tax liability as of Dec. 31:

(Millions of Dollars)	2024		2023 (a)
Deferred tax liabilities:
Differences between book and tax bases of property	$	7,008	$	6,744
Regulatory assets	566		523
Operating lease assets	282		327
Pension expense	155		151
Deferred fuel costs	—		67
Other	97		80
Total deferred tax liabilities	$	8,108	$	7,892
Deferred tax assets:
Tax credit carryforward	$	1,589	$	1,718
Regulatory liabilities	751		715
Operating lease liabilities	282		327
Other employee benefits	102		117
Deferred ITCs	11		16
NOL carryforward	1		—
NOL and tax credit valuation allowances	(73)		(70)
Other	126		184
Total deferred tax assets	2,789		3,007
Net deferred tax liability	$	5,319	$	4,885

(a)Prior periods have been reclassified to conform to current year presentation.

Other Income Tax Matters — NOL amounts represent the tax loss that is carried forward and tax credits represent the deferred tax asset. NOL and tax credit carryforwards as of Dec. 31:

(Millions of Dollars)	2024		2023
Federal tax credit carryforwards	$	1,519	$	1,644
Valuation allowances for federal credit carryforwards	(14)		(10)
State NOL carryforwards	9		11
Valuation allowances for state NOL carryforwards	(2)		(2)
State tax credit carryforwards, net of federal detriment (a)	70		74
Valuation allowances for state credit carryforwards, net of federal benefit (b)	(58)		(60)

(a)State tax credit carryforwards are net of federal detriment of $19 million and $20 million as of Dec. 31, 2024 and 2023, respectively.

(b)Valuation allowances for state tax credit carryforwards were net of federal benefit of $16 million as of Dec. 31, 2024 and 2023.

Federal carryforward periods expire between 2038 and 2044. State carryforward periods, not including those with indefinite carryforward periods, expire between 2025 and 2037.

Unrecognized Tax Benefits

Federal Audit — Statute of limitations applicable to Xcel Energy’s consolidated federal income tax returns expire as follows:

Tax Year(s)	Expiration
2014 - 2016	March 2025
2021	October 2025

Additionally, the statute of limitations related to the federal tax credit carryforwards will remain open until those credits are utilized in subsequent returns. Further, the statute of limitations related to the additional federal tax loss carryback claim filed in 2020 has been extended. In 2023 the IRS issued its Revenue Agent’s Report related to the federal tax loss carryback claim. The Company materially agreed with the report and re-recognized the related benefit in 2023.

State Audits — Xcel Energy files consolidated state tax returns based on income in its major operating jurisdictions and various other state income-based tax returns.

As of Dec. 31, 2024, Xcel Energy’s earliest open tax years (subject to examination by state taxing authorities in its major operating jurisdictions) were as follows:

State	Tax Year(s)	Expiration
Colorado	2014 - 2016	March 2026
Colorado	2020	September 2025
Minnesota	2014 - 2016	September 2025
Minnesota	2020	June 2025
Texas	2016 - 2019	December 2025
Wisconsin	2016 - 2019	May 2025
Wisconsin	2020	September 2025

•In 2021, Texas began an audit of tax years 2016 - 2019. As of Dec. 31, 2024, no material adjustments have been proposed.

•In 2021, Wisconsin began an audit of tax years 2016-2019. As of Dec. 31, 2024, no material adjustments have been proposed.

•No other state income tax audits are in progress for its major operating jurisdictions as of Dec. 31, 2024.

Unrecognized tax benefit balance may include permanent tax positions, which if recognized would affect the ETR. In addition, the unrecognized tax benefit balance may include temporary tax positions for which deductibility is highly certain, but for which there is uncertainty about the timing. A change in the period of deductibility would not affect the ETR but would accelerate the payment to the taxing authority.

Unrecognized tax benefits - permanent vs. temporary:

(Millions of Dollars)	Dec. 31, 2024		Dec. 31, 2023
Unrecognized tax benefit — Permanent tax positions	$	43	$	41
Unrecognized tax benefit — Temporary tax positions	—		—
Total unrecognized tax benefit	$	43	$	41

Changes in unrecognized tax benefits:

(Millions of Dollars)	2024		2023		2022
Balance at Jan. 1	$	41	$	67	$	58
Additions based on tax positions related to the current year	5		5		7
Additions for tax positions of prior years	2		1		6
Reductions for tax positions of prior years	(3)		(29)		(1)
Reductions for tax positions related to settlements with taxing authorities	—		(1)		(1)
Reductions for tax positions related to statute of limitations	(2)		(2)		(2)
Balance at Dec. 31	$	43	$	41	$	67

Unrecognized tax benefits were reduced by tax benefits associated with NOL and tax credit carryforwards:

(Millions of Dollars)	Dec. 31, 2024		Dec. 31, 2023
NOL and tax credit carryforwards	$	(35)	$	(35)

As state audits progress, it is reasonably possible that the amount of current liabilities related to unrecognized tax benefits could decrease up to approximately $2 million in the next 12 months. Additionally, there exists approximately $41 million of noncurrent liabilities related to unrecognized tax benefits for which there is uncertainty about if or when these liabilities will significantly increase or decrease.

Payable for interest related to unrecognized tax benefits is partially offset by the interest benefit associated with NOL and tax credit carryforwards.

Interest payable related to unrecognized tax benefits:

(Millions of Dollars)	2024		2023		2022
Payable for interest related to unrecognized tax benefits at Jan. 1	$	(1)	$	(4)	$	(3)
Interest (expense) benefit related to unrecognized tax benefits	(1)		3		(1)
Payable for interest related to unrecognized tax benefits at Dec. 31	$	(2)	$	(1)	$	(4)

No penalties were accrued related to unrecognized tax benefits as of Dec. 31, 2024, 2023 or 2022.