Income Taxes

3 Months Ended

Mar. 31, 2021

NEE's effective income tax rate for the three months ended March 31, 2021 and 2020 was approximately 14.3% and (321.9)%, respectively. NEE's effective income tax rate is based on the composition of pre-tax income and, for the three months ended March 31, 2020, primarily reflects the impact of unfavorable changes in the fair value of interest rate derivative instruments and equity securities held in NEER's nuclear decommissioning funds, and the gain on the sale of the Spain solar projects that was not taxable for federal and state income tax purposes (see Note 11 - Disposal of a Business). State income taxes for the three months ended March 31, 2021 reflect state tax benefits associated with financial impacts from the severe prolonged winter weather in Texas in February 2021.

A reconciliation between the effective income tax rates and the applicable statutory rate is as follows:


	NEE	FPL
	Three Months Ended March 31,	Three Months Ended March 31,
		2021		2020		2021		2020
Statutory federal income tax rate		21.0	%	21.0	%	21.0	%	21.0	%
Increases (reductions) resulting from:
State income taxes - net of federal income tax benefit		0.8		(61.0)		4.4		4.3
Taxes attributable to noncontrolling interests		2.0		32.7		—		—
PTCs and ITCs - NEER		(5.0)		(86.5)		—		—
Amortization of deferred regulatory credit		(1.9)		(55.5)		(3.4)		(4.8)
Foreign operations		0.2		(76.9)		—		—

Other - net		(2.8)		(95.7)		(0.8)		(2.7)
Effective income tax rate		14.3	%	(321.9)	%	21.2	%	17.8	%

NEE recognizes PTCs as wind energy is generated and sold based on a per kWh rate prescribed in applicable federal and state statutes, which may differ significantly from amounts computed, on a quarterly basis, using an overall effective income tax rate anticipated for the full year. NEE uses this method of recognizing PTCs for specific reasons, including that PTCs are an integral part of the expected value of most wind projects and a fundamental component of such wind projects' results of operations. PTCs, as well as ITCs, can significantly affect NEE's effective income tax rate depending on the amount of pretax income. The amount of PTCs recognized can be significantly affected by wind generation and by the roll off of PTCs after ten years of production.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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