Income Taxes

6 Months Ended

Jun. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income TaxesNEE's effective income tax rate for the three months ended June 30, 2022 and 2021 was approximately 20.9% and 205.9%, respectively, and for the six months ended June 30, 2022 and 2021 was approximately (18.3)% and 6.6%, respectively. NEE's effective income tax rate is based on the composition of pretax income or loss, and, for the six months ended June 30, 2022, primarily reflects the impact of favorable changes in the fair value of interest rate derivative instruments, unfavorable changes in the fair value of commodity derivatives and equity securities held in NEER's nuclear decommissioning funds, as well as the first quarter of 2022 impairment charge related to the investment in Mountain Valley Pipeline (see Note 3 – Nonrecurring Fair Value Measurements). NEE's effective income tax rate reflects the impact of unfavorable changes in the fair value of interest rate derivative instruments for the three months ended June 30, 2021 and commodity derivatives for the three and six months ended June 30, 2021. State income taxes for the six months ended June 30, 2021 reflect state tax benefits associated with the financial impacts from the February 2021 weather event.

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

	NEE				FPL				NEE				FPL
	Three Months Ended June 30,				Three Months Ended June 30,				Six Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021		2022		2021		2022		2021
Statutory federal income tax rate	21.0	%	21.0	%	21.0	%	21.0	%	21.0	%	21.0	%	21.0	%	21.0	%
Increases (reductions) resulting from:
State income taxes – net of federal income tax benefit	4.1		14.7		4.4		4.0		(0.4)		0.2		4.4		4.2
Taxes attributable to noncontrolling interests	4.0		(83.1)		—		—		30.0		5.4		—		—
PTCs and ITCs – NEER	(3.2)		169.4		—		—		(31.0)		(11.9)		—		—
Amortization of deferred regulatory credit	(3.5)		72.7		(3.9)		(3.7)		(27.8)		(4.9)		(4.0)		(3.5)
Other – net	(1.5)		11.2		(0.7)		(0.8)		(10.1)		(3.2)		(0.6)		(0.9)
Effective income tax rate	20.9	%	205.9	%	20.8	%	20.5	%	(18.3)	%	6.6	%	20.8	%	20.8	%

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 or loss. The amount of PTCs recognized can be significantly affected by wind generation and by the roll off of PTCs after ten years of production.