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Income Taxes
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income tax expense is summarized as follows:
 Year Ended December 31,
(In millions)202220212020
Current   
Federal$791 $207 $(32)
State78 11 1 
869 218 (31)
Deferred   
Federal217 119 68 
State18 7 4 
235 126 72 
Income tax expense$1,104 $344 $41 
Income tax expense was different than the amounts computed by applying the statutory federal income tax rate as follows:
 Year Ended December 31,
202220212020
(In millions, except rates)Amount RateAmount RateAmount Rate
Computed “expected” federal income tax$1,085 21.00 %$315 21.00 %$51 21.00 %
State income tax, net of federal income tax benefit93 1.80 %24 1.59 %5 1.86 %
Deferred tax adjustment related to change in overall state tax rate(23)(0.45)%(7)(0.46)%1 0.50 %
Valuation allowance(66)(1.28)%3 0.22 %(4)(1.58)%
Excess executive compensation10 0.20 %15 1.03 %5 2.18 %
Reserve on uncertain tax positions6 0.12 %1 0.05 %6 2.47 %
Tax credits generated(34)(0.66)%(6)(0.39)%(23)(9.63)%
Other, net33 0.62 %(1)(0.14)%— 0.04 %
Income tax expense$1,104 21.35 %$344 22.90 %$41 16.84 %
In 2022, the Company's overall effective tax rate decreased compared to 2021, primarily due to a decrease in the non-deductible excess executive compensation paid in 2022 compared to 2021, tax benefits recorded in 2022 compared to 2021 from the release of valuation allowances primarily associated with state net operating loss carryforwards, and greater research and development tax credit benefits recorded in 2022 compared to 2021 related to amended prior-year returns. The overall effective tax rate increased in 2021 compared to 2020, primarily due to lower research and development tax credit benefits recorded in 2021 compared to 2020.
The composition of net deferred tax liabilities is as follows:
 December 31,
(In millions)20222021
Deferred Tax Assets  
Net operating losses$196 $388 
Incentive compensation24 23 
Deferred compensation30 22 
Post-retirement benefits4 8 
Capital loss carryforward16 30 
Other credit carryforwards4 10 
Leases13 11 
Derivative instruments— 35 
Other30 18 
Less: valuation allowance(110)(177)
   Total207 368 
Deferred Tax Liabilities  
Properties and equipment3,498 3,459 
Equity method investments1 1 
Leases14 9 
Derivative instruments33 — 
   Total3,546 3,469 
Net deferred tax liabilities$3,339 $3,101 
At December 31, 2022, the Company had federal net operating loss carryforwards of approximately $442 million, of which $378 million is subject to expiration in years 2035 through 2037, and of which $64 million does not expire. The Company has a valuation allowance on $37 million of the federal net operating losses, but believes the remaining $405 million will be fully utilized prior to expiration. The Company had gross state net operating losses of $2.6 billion at December 31, 2022, primarily expiring between 2022 and 2040, with all but $198 million covered by a valuation allowance. The Company had capital loss carryforwards of $71 million, which can only be used to offset future capital gains, and expires in 2024. Accordingly, all but $6 million has been offset with a valuation allowance. The Company also had enhanced oil recovery credits of $4 million at December 31, 2022 that are fully offset by valuation allowances.
As of December 31, 2022, the Company had $8 million of valuation allowances on the deferred tax benefits related to federal net operating losses, $83 million of valuation allowances on the deferred tax benefits related to state net operating losses, $15 million of valuation allowances on the deferred tax benefits related to capital loss carryforwards, and $4 million of valuation allowances on the deferred tax benefits related to enhanced oil recovery credits. The Company believes it is more likely than not that the remainder of its deferred tax benefits will be utilized prior to their expiration.
Unrecognized Tax Benefits
A reconciliation of unrecognized tax benefits is as follows:
Year Ended December 31,
(In millions)202220212020
Balance at beginning of period$7 $6 $1 
Additions for tax positions of current period1 1 — 
Additions for tax positions of prior periods
5 — 5 
Balance at end of period$13 $7 $6 
During 2022, the Company recorded a $1 million reserve for unrecognized tax benefits related to estimated current year research and development tax credits. In addition, the Company also recorded a $5 million reserve for unrecognized tax benefits related to research and development credits attributable to Cimarex for prior years. As of December 31, 2022, the Company’s overall net reserve for unrecognized tax positions was $13 million, with a $1 million liability for accrued interest on the uncertain tax positions. If recognized, the net tax benefit of $13 million would not have a material effect on the Company’s effective tax rate.
The Company files income tax returns in the U.S. federal, various states and other jurisdictions. The Company is no longer subject to examinations by state authorities before 2012 or by federal authorities before 2017. The Company believes that appropriate provisions have been made for all jurisdictions and all open years, and that any assessment on these filings will not have a material impact on the Company’s financial position, results of operations or cash flows.
Recent U.S. Tax Legislation
On August 16, 2022, the Inflation Reduction Act (“IRA”) was signed into law pursuant to the budget reconciliation process. The IRA introduced a new 15 percent corporate alternative minimum tax, effective for tax years beginning after December 31, 2022, on the adjusted financial statement income (“AFSI”) of corporations with average AFSI exceeding $1 billion over a three-year testing period. The IRA also introduced an excise tax of one percent on the fair market value of certain public company stock repurchases made after December 31, 2022. The Company is continuing to evaluate the IRA and its requirements, as well as the impact to the Company’s business.