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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income taxes Income taxes
Components of current and deferred income tax expense (benefit) are as follows ($000’s omitted):
 
202420232022
Current expense
Federal$649,308 $622,205 $615,434 
State and other122,212 120,424 100,223 
$771,520 $742,629 $715,657 
Deferred expense
Federal$120,415 $72,854 $55,653 
State and other30,682 31,412 50,931 
$151,097 $104,266 $106,584 
Income tax expense$922,617 $846,895 $822,241 
The following table reconciles the statutory federal income tax rate to the effective income tax rate:
 
202420232022
Income taxes at federal statutory rate21.0 %21.0 %21.0 %
State and local income taxes, net of federal tax3.6 3.5 3.4 
Federal tax credits(1.1)(0.2)(0.9)
Other(0.5)0.3 0.4 
Effective rate23.0 %24.6 %23.9 %

The effective tax rates differ from the federal statutory rate primarily due to state income tax expense and benefits associated with various federal energy tax credits.

Deferred tax assets and liabilities reflect temporary differences arising from the different treatment of items for tax and accounting purposes. Components of our net deferred tax liability are as follows ($000’s omitted):
 
 At December 31,
 20242023
Deferred tax assets:
Accrued insurance$92,283 $140,126 
Inventory valuation reserves51,370 58,819 
Capitalized inventory expenses43,338 39,037 
State NOL carryforwards73,550 83,601 
Other66,055 65,432 
326,596 387,015 
Deferred tax liabilities:
Deferred income(630,888)(537,855)
Fixed assets and intangibles(21,882)(27,890)
Other(39,983)(33,909)
(692,753)(599,654)
Valuation allowance(22,368)(24,756)
Net deferred tax liability$(388,525)$(237,395)

We have state NOLs in various jurisdictions that may generally be carried forward up to 20 years, depending on the jurisdiction. Our state NOL carryforward deferred tax assets will expire if unused at various dates as follows: $31.9 million from 2025 to 2029 and $41.7 million from 2030 and thereafter.

We evaluate our deferred tax assets each period to determine if a valuation allowance is required based on whether it is "more likely than not" that some portion of the deferred tax assets would not be realized. The ultimate realization of these deferred tax assets is dependent upon the generation of sufficient taxable income during future periods. We conduct our evaluation by considering all available positive and negative evidence, including, among other factors, historical operating results, forecasts of future profitability, the duration of statutory carryforward periods, and the outlooks for the U.S. housing industry and broader economy.
The accounting for deferred taxes is based upon estimates of future results. Differences between estimated and actual results could result in changes in the valuation of our deferred tax assets that could have a material impact on our consolidated results of operations or financial position. Changes in existing tax laws could also affect actual tax results and the realization of deferred tax assets over time.
Unrecognized tax benefits represent the difference between tax positions taken or expected to be taken in a tax return and the benefits recognized for financial statement purposes. We had $38.7 million and $58.2 million of gross unrecognized tax benefits at December 31, 2024 and 2023, respectively. If recognized, $30.6 million and $46.0 million, respectively, of these amounts would impact our effective tax rate. Additionally, we had accrued interest and penalties of $1.9 million and $6.3 million at December 31, 2024 and 2023, respectively.
We do not expect the total amount of gross unrecognized tax benefits to increase or decrease by a material amount within the next twelve months. A reconciliation of the change in the unrecognized tax benefits is as follows ($000’s omitted):

 
202420232022
Unrecognized tax benefits, beginning of period$58,228 $23,612 $22,536 
Increases related to positions taken during a prior period544 34,687 — 
Decreases related to positions taken during a prior period(17,992)— (303)
Increases related to positions taken during the current period— — 1,450 
Decreases related to settlements with taxing authorities(1,994)— — 
Decreases related to lapse of the applicable statute of limitations(71)(71)(71)
Unrecognized tax benefits, end of period$38,715 $58,228 $23,612 

We continue to participate in the Compliance Assurance Process (“CAP”) with the IRS as an alternative to the traditional IRS examination process. Through the CAP program, we work with the IRS to achieve tax compliance by resolving issues prior to filing the tax return. We are also currently under examination by state taxing jurisdictions and anticipate finalizing certain of the examinations within the next twelve months. The outcome of these examinations is not yet determinable, and we are not aware of unrecorded liabilities. The statute of limitations for our major tax jurisdictions generally remains open for examination for tax years 2020 to 2024.
We are under contract to purchase federal transferable tax credits that we expect to use to offset future federal income tax obligations totaling $222 million. The timing of such purchases is intended to approximate the timing of our expected federal income tax obligations.