INCOME TAXES

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

Income Tax Provision

Details of the Company’s income tax provision are presented below:

In millions of dollars	2023		2022		2021
Current
Federal	$	41	$	407	$	522
Non-U.S.	5,807		4,106		3,288
State	96		270		228
Total current income taxes	$	5,944	$	4,783	$	4,038
Deferred
Federal	$	(1,925)	$	(807)	$	1,059
Non-U.S.	(432)		353		8
State	(59)		(687)		346
Total deferred income taxes	$	(2,416)	$	(1,141)	$	1,413
Provision for income tax on continuing operations before noncontrolling interests(1)	$	3,528	$	3,642	$	5,451
Provision (benefit) for income taxes on:
Discontinued operations	$	—	$	(41)	$	—
Gains (losses) included in AOCI, but excluded from net income	557		(1,573)		(1,684)
Employee stock plans	(13)		(8)		(6)
Opening adjustment to Retained earnings(2)	102		—		—
Opening adjustment to AOCI(3)	12		—		—

(1)Includes the tax on realized investment gains and impairment losses resulting in a provision (benefit) of $51 million and $(92) million in 2023, $14 million and $(137) million in 2022 and $169 million and $(57) million in 2021, respectively.

(2)Related to the adoption of “Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures.” See Note 1.

(3)Related to the adoption of “Financial Services—Insurance: Targeted Improvements to the Accounting for Long-Duration Contracts.” See Note 1.

Tax Rate

The reconciliation of the federal statutory income tax rate to the Company’s effective income tax rate applicable to income from continuing operations (before noncontrolling interests and the cumulative effect of accounting changes) for each of the periods indicated is as follows:

	2023		2022		2021
Federal statutory rate	21.0	%	21.0	%	21.0	%
State income taxes, net of federal benefit	0.3		2.0		2.1
Non-U.S. income tax rate differential	9.5		4.3		1.6
Tax audit resolutions	(0.3)		(3.2)		(0.4)
Nondeductible FDIC premiums(1)	1.7		1.0		0.6
Tax-advantaged investments	(4.4)		(3.0)		(2.3)
Valuation allowance releases(2)	(0.2)		(2.3)		(1.7)
Other, net	(0.3)		(0.4)		(1.1)
Effective income tax rate	27.3	%	19.4	%	19.8	%

(1)Excludes the 2023 FDIC special assessment, which is tax deductible. See Note 30.

(2)See “Deferred Tax Assets” below for a description of the components.

As presented in the table above, Citi’s effective tax rate for 2023 was 27.3%, compared to 19.4% in 2022, due to the geographic mix of earnings and the absence of the prior-year discrete benefits.

Deferred Income Taxes

Deferred income taxes at December 31 related to the following:

In millions of dollars	2023		2022
Deferred tax assets
Credit loss deduction	$	5,449	$	5,162
Deferred compensation and employee benefits	2,771		2,059
U.S. tax on non-U.S. earnings	1,349		1,191
Investment and loan basis differences	4,706		5,218
Tax credit and net operating loss carry-forwards	15,250		14,623
Fixed assets and leases	4,297		3,551
Other deferred tax assets	5,235		4,055
Gross deferred tax assets	$	39,057	$	35,859
Valuation allowance	$	3,572	$	2,438
Deferred tax assets after valuation allowance	$	35,485	$	33,421
Deferred tax liabilities
Intangibles and leases	$	(2,333)	$	(2,271)
Non-U.S. withholding taxes	(951)		(1,142)
Debt issuances	(113)		(595)
Derivatives	(587)		(69)
Other deferred tax liabilities	(1,893)		(1,672)
Gross deferred tax liabilities	$	(5,877)	$	(5,749)
Net deferred tax assets	$	29,608	$	27,672

Unrecognized Tax Benefits

The following is a rollforward of the Company’s unrecognized tax benefits:

In millions of dollars	2023		2022		2021
Total unrecognized tax benefits at January 1	$	1,311	$	1,296	$	861
Increases for current year’s tax positions	59		55		97
Increases for prior years’ tax positions	51		168		515
Decreases for prior years’ tax positions	(138)		(119)		(107)
Amounts of decreases relating to settlements	(3)		(50)		(64)
Reductions due to lapse of statutes of limitation	(4)		(26)		(2)
Foreign exchange, acquisitions and dispositions	1		(13)		(4)
Total unrecognized tax benefits at December 31	$	1,277	$	1,311	$	1,296

The portions of the total unrecognized tax benefits at December 31, 2023, 2022 and 2021 that, if recognized, would affect Citi’s tax expense is $1.0 billion in each of the respective years. The remaining uncertain tax positions have offsetting amounts in other jurisdictions or are temporary differences.

Interest and penalties (not included in unrecognized tax benefits above) are a component of Provision for income taxes. 

	2023				2022				2021
In millions of dollars	Pretax		Net of tax		Pretax		Net of tax		Pretax		Net of tax
Total interest and penalties on the Consolidated Balance Sheet at January 1	$	234	$	176	$	214	$	164	$	118	$	96
Total interest and penalties in the Consolidated Statement of Income	47		38		27		16		32		24
Total interest and penalties on the Consolidated Balance Sheet at December 31(1)	271		205		234		176		214		164

(1)Includes $0 million, $3 million and $3 million for non-U.S. penalties in 2023, 2022 and 2021, respectively.

As of December 31, 2023, Citi was under audit by the Internal Revenue Service and other major taxing jurisdictions around the world. It is thus reasonably possible that significant changes in the gross balance of unrecognized tax benefits may occur within the next 12 months. The potential range of amounts that could affect Citi’s effective tax rate is between $0 and $500 million.

The following are the major tax jurisdictions in which the Company and its affiliates operate and the earliest tax year subject to examination:

Jurisdiction	Tax year
United States	2016
Mexico	2017
New York State and City	2009
United Kingdom	2016
India	2021
Singapore	2022
Hong Kong	2023
Ireland	2018

Non-U.S. Earnings

Non-U.S. pretax earnings approximated $19.4 billion in 2023, $16.2 billion in 2022 and $12.9 billion in 2021. As a U.S. corporation, Citigroup and its U.S. subsidiaries are currently subject to U.S. taxation on all non-U.S. pretax earnings of non-U.S. branches. Beginning in 2018, there is a separate foreign tax credit (FTC) basket for branches. Also, dividends from a non-U.S. subsidiary or affiliate are effectively exempt from U.S. taxation. The Company provides income taxes on the book over tax basis differences of non-U.S. subsidiaries except to the extent that such differences are indefinitely reinvested outside the U.S.

At December 31, 2023, $6.0 billion of basis differences of non-U.S. entities was indefinitely reinvested. At the existing tax rates (including withholding taxes), additional taxes (net of U.S. FTCs) of $2.3 billion would have to be provided if such assertions were reversed.

Deferred Tax Assets

As of December 31, 2023, Citi had a valuation allowance of $3.6 billion, composed of valuation allowances of $1.9 billion on its branch basket FTC carry-forwards, $1.2 billion on its U.S. residual DTA related to its non-U.S. branches, $0.4 billion on local non-U.S. DTAs and $0.1 billion on state net operating loss carry-forwards. There was an increase of $1.2 billion from the December 31, 2022 balance of $2.4 billion. The amount of Citi’s valuation allowances (VA) may change in future years.

In 2023, Citi’s VA for carry-forward FTCs in its branch basket increased by $1.0 billion, primarily due to lower ODL usage.

The level of branch pretax income, the local branch tax rate and the allocations of overall domestic losses (ODL) and expenses for U.S. tax purposes to the branch basket are the main factors in determining the branch VA. There was no branch basket VA release in 2023.

The non-U.S. local VA was unchanged.

The following table summarizes Citi’s DTAs:

In billions of dollars
Jurisdiction/component(1)	DTAs balance December 31, 2023		DTAs balance December 31, 2022
U.S. federal(2)
Net operating losses (NOLs)(3)	$	3.3	$	3.3
Foreign tax credits (FTCs)	1.2		1.9
General business credits (GBCs)	5.6		5.2
Future tax deductions and credits	12.0		10.1
Total U.S. federal	$	22.1	$	20.5
State and local
New York NOLs	$	1.7	$	1.9
Other state NOLs	0.1		0.2
Future tax deductions	2.4		2.2
Total state and local	$	4.2	$	4.3
Non-U.S.
NOLs	$	1.0	$	0.7
Future tax deductions	2.3		2.2
Total non-U.S.	$	3.3	$	2.9
Total	$	29.6	$	27.7

(1)All amounts are net of valuation allowances.

(2)Included in the net U.S. federal DTAs of $22.1 billion as of December 31, 2023 were deferred tax liabilities of $2.9 billion that will reverse in the relevant carry-forward period and may be used to support the DTAs.

(3)Consists of non-consolidated tax return NOL carry-forwards that are eventually expected to be utilized in Citigroup’s consolidated tax return. 

The following table summarizes the amounts of tax carry-forwards and their expiration dates: 

In billions of dollars
Year of expiration	December 31, 2023		December 31, 2022
U.S. tax return general basket foreign tax credit carry-forwards(1)
2025	$	0.1	$	0.8
2027	1.1		1.1
Total U.S. tax return general basket foreign tax credit carry-forwards	$	1.2	$	1.9
U.S. tax return branch basket foreign tax credit carry-forwards(1)
2028	$	0.7	$	0.7
2029	0.2		0.2
2033	1.0		—
Total U.S. tax return branch basket foreign tax credit carry-forwards	$	1.9	$	0.9
U.S. tax return general business credit carry-forwards
2032	$	0.4	$	0.4
2033	0.3		0.3
2034	0.2		0.2
2035	0.2		0.2
2036	0.2		0.2
2037	0.5		0.5
2038	0.5		0.5
2039	0.7		0.7
2040	0.7		0.7
2041	0.8		0.8
2042	0.7		0.7
2043	0.4		—
Total U.S. tax return general business credit carry-forwards	$	5.6	$	5.2
U.S. subsidiary separate federal NOL carry-forwards
2027	$	0.1	$	0.1
2028	0.1		0.1
2030	0.3		0.3
2033	1.7		1.6
2034	1.9		2.0
2035	3.3		3.3
2036	2.1		2.1
2037	1.0		1.0
Unlimited carry-forward period	5.4		5.3
Total U.S. subsidiary separate federal NOL carry-forwards(2)	$	15.9	$	15.8
New York State NOL carry-forwards(2)
2034	$	9.9	$	11.5
New York City NOL carry-forwards(2)
2034	$	8.7	$	10.3
Non-U.S. NOL carry-forwards(1)
Various	$	1.4	$	1.1

(1)Before valuation allowance.

(2)Pretax.

Although realization is not assured, Citi believes that the realization of the recognized net DTAs of $29.6 billion at December 31, 2023 is more-likely-than-not, based on expectations as to future taxable income in the jurisdictions in which the DTAs arise and consideration of available tax planning strategies (as defined in ASC 740, Income Taxes).

The majority of Citi’s U.S. federal net operating loss carry-forward and all of its New York State and City net operating loss carry-forwards are subject to a carry-forward period of 20 years. This provides enough time to fully utilize the DTAs pertaining to these existing NOL carry-forwards. This is due to Citi’s forecast of sufficient U.S. taxable income and because New York State and City continue to tax Citi’s non-U.S. income.

With respect to the FTCs component of the DTAs, the carry-forward period is 10 years. Utilization of FTCs in any year is generally limited to 21% of foreign source taxable income in that year. However, ODL that Citi has incurred of approximately $7 billion as of December 31, 2023 are allowed to be reclassified as foreign source income to the extent of 50%–100% (at taxpayer’s election) of domestic source income produced in subsequent years. Such resulting foreign source income would help support the realization of the FTC carry-forwards after VA. As noted in the tables above, Citi’s FTC carry-forwards were $1.2 billion ($3.1 billion before VA) as of December 31, 2023, compared to $1.9 billion ($2.8 billion before VA) as of December 31, 2022. The increased VA on branch FTCs is reflected in the “Non-U.S. income tax rate differential” line in the “Tax Rate” section above. Citi believes that it will more-likely-than-not generate sufficient U.S. taxable income within the 10-year carry-forward period to be able to utilize the net FTCs after the VA, after considering any FTCs produced in the tax return for such period, which must be used prior to any carry-forward utilization.