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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income tax expense is summarized as follows:
 Year Ended December 31,
(In millions)202320222021
Current   
Federal$387 $791 $207 
State42 78 11 
429 869 218 
Deferred   
Federal52 217 119 
State22 18 7 
74 235 126 
Income tax expense$503 $1,104 $344 
Income tax expense was different than the amounts computed by applying the statutory federal income tax rate as follows:
 Year Ended December 31,
202320222021
(In millions, except rates)Amount RateAmount RateAmount Rate
Computed “expected” federal income tax$447 21.00 %$1,085 21.00 %$315 21.00 %
State income tax, net of federal income tax benefit29 1.35 %93 1.80 %24 1.59 %
Deferred tax adjustment related to change in overall state tax rate16 0.73 %(23)(0.45)%(7)(0.46)%
Valuation allowance3 0.13 %(66)(1.28)%3 0.22 %
Excess executive compensation11 0.50 %10 0.20 %15 1.03 %
Reserve on uncertain tax positions6 0.31 %6 0.12 %1 0.05 %
Tax credits generated(14)(0.65)%(34)(0.66)%(6)(0.39)%
Other, net5 0.27 %33 0.62 %(1)(0.14)%
Income tax expense$503 23.64 %$1,104 21.35 %$344 22.90 %
In 2023, the Company's overall effective tax rate increased compared to 2022, primarily due to tax expenses recorded in 2023 compared to tax benefits recorded in 2022 from the release of valuation allowances primarily associated with state net operating loss carryforwards and deferred tax adjustments related to changes in the overall state tax rate. The overall effective tax rate decreased in 2022 compared to 2021, primarily due to tax benefits recorded in 2022 compared to 2021 from the release of valuation allowances primarily associated with state net operating loss carryforwards, a decrease in the non-deductible excess executive compensation paid in 2022 compared to 2021, and greater research and development tax credit benefits recorded in 2022 compared to 2021 related to amended prior-year returns.
The composition of net deferred tax liabilities is as follows:
 December 31,
(In millions)20232022
Deferred Tax Assets  
Net operating losses$173 $196 
Incentive compensation47 24 
Deferred compensation5 30 
Capital loss carryforward16 16 
Leases96 96 
Other42 38 
Less: valuation allowance(114)(110)
   Total265 290 
Deferred Tax Liabilities  
Properties and equipment3,558 3,498 
Leases98 97 
Derivative instruments21 33 
Other1 1 
   Total3,678 3,629 
Net deferred tax liabilities$3,413 $3,339 
At December 31, 2023, the Company had federal net operating loss carryforwards of approximately $383 million, of which $318 million is subject to expiration in years 2035 through 2037, and of which $65 million does not expire. The Company had a valuation allowance on $38 million of the federal net operating loss carryforwards, but believes the remaining $345 million will be fully utilized prior to expiration. The Company had gross state net operating loss carryforwards of $2.7 billion at December 31, 2023, primarily expiring between 2023 and 2043, with all but $151 million covered by a valuation allowance. The Company had a capital loss carryforward 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, 2023 that are fully offset by valuation allowances.
As of December 31, 2023, the Company had $8 million of valuation allowances on the deferred tax benefits related to federal net operating loss carryforwards, $87 million of valuation allowances on the deferred tax benefits related to state net operating loss carryforwards, $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)202320222021
Balance at beginning of period$13 $7 $6 
Additions for tax positions of current period4 1 1 
Additions for tax positions of prior periods
3 5 — 
Balance at end of period$20 $13 $7 
During 2023, the Company recorded a $4 million reserve for unrecognized tax benefits related to estimated current year research and development tax credits. In addition, the Company also recorded a $3 million reserve for unrecognized tax benefits related to research and development credits taken on the 2022 tax return. As of December 31, 2023, the Company’s overall net reserve for unrecognized tax positions was $20 million, with a $2 million liability for accrued interest on the uncertain tax
positions. The Company believes that if recognized, the net tax benefit of $20 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 (“CAMT”), 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. Based on the current CAMT guidance available, the Company is an “applicable corporation” beginning in 2023, but is not expecting to owe any additional tax under the CAMT for 2023.