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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes
Total income tax expense from operations differs from the amount computed by applying the statutory federal income tax rate to income before income tax expense.
Effective income tax rate for years ended Dec. 31:
202420232022
Federal statutory rate21.0 %21.0 %21.0 %
State income tax on pretax income, net of federal tax effect2.1 2.4 2.3 
Increases (decreases) in tax from:
Wind PTCs (a)
(34.3)(33.5)(35.9)
Plant regulatory differences (b)
(4.6)(3.3)(3.8)
Amortization of (excess)/deficient nonplant deferred taxes(0.2)0.3 (0.9)
Other, net(0.9)(0.2)(0.6)
Effective income tax rate(16.9)%(13.3)%(17.9)%
(a)Wind PTCs net of estimated transfer discounts. Gross wind PTCs are credited to customers (reduction to revenue) and do not materially impact net income.
(b)Plant regulatory differences primarily relate to the credit of excess deferred taxes to customers through the average rate assumption method. Income tax benefits associated with the credit are offset by corresponding revenue reductions.
Components of income tax expense for years ended Dec. 31:
(Millions of Dollars)202420232022
Current federal tax expense (benefit)$42 $76 $(65)
Current state tax expense (benefit)4 12 (5)
Deferred federal tax (benefit) expense(105)(132)3 
Deferred state tax expense (benefit)2 (1)13 
Deferred change in unrecognized tax expense— — 1 
Total income tax benefit$(57)$(45)$(53)
Components of deferred income tax expense as of Dec. 31:
(Millions of Dollars)202420232022
Deferred tax expense (benefit) excluding items below
$143 $(117)$37 
Adjustments to deferred income taxes for tax credit cash transfers (a)
(226)— — 
Amortization and adjustments to deferred income taxes on income tax regulatory assets and liabilities(19)(16)(20)
Tax expense allocated to other comprehensive income and other(1)— — 
Deferred tax (benefit) expense$(103)$(133)$17 
(a)Proceeds from tax credit transfers are included in cash received (paid) for income taxes in the statement of cash flows.
Components of the net deferred tax liability as of Dec. 31:
(Millions of Dollars)20242023
Deferred tax liabilities:
Differences between book and tax bases of property$1,089 $1,072 
Operating lease assets83 90 
Regulatory assets53 51 
Pension expense33 32 
Other2 — 
Total deferred tax liabilities$1,260 $1,245 
Deferred tax assets:
Tax credit carryforward$292 $406 
Regulatory liabilities90 95 
Operating lease liabilities83 90 
Other employee benefits5 6 
Deferred fuel costs10 5 
Tax credit valuation allowances— (2)
Other15 23 
Total deferred tax assets495 623 
Net deferred tax liability$765 $622 
Other Income Tax Matters — NOL amounts represent the tax loss that is carried forward and tax credits represent the deferred tax asset. NOL and tax credit carryforwards as of Dec. 31 were as follows:
(Millions of Dollars)20242023
Federal tax credit carryforwards$292 $406 
Valuation allowances for federal credit carryforwards— (2)
State NOL carryforwards2 3 
Federal carryforward periods expire between 2039 and 2044. State carryforwards have an indefinite expiration period.
Unrecognized Tax Benefits
Federal Audit — SPS is a member of the Xcel Energy affiliated group that files a consolidated federal income tax return. Statute of limitations applicable to Xcel Energy’s consolidated federal tax returns expire as follows:
Tax Year(s)Expiration
2014 - 2016March 2025
2021October 2025
Additionally, the statute of limitations related to the federal tax credit carryforwards will remain open until those credits are utilized in subsequent returns. Further, the statute of limitations related to the additional federal tax loss carryback claim filed in 2020 has been extended. In 2023 the IRS issued its Revenue Agent’s Report related to the federal tax loss carryback claim. The Company materially agreed with the report and re-recognized the related benefit in 2023.

State Audits — SPS is a member of the Xcel Energy affiliated group that files consolidated state tax returns based on income in its major operating jurisdictions and various other state income-based tax returns. As of Dec. 31, 2024, SPS’ earliest open tax years (subject to examination by state taxing authorities in its major operating jurisdictions) were as follows:
StateTax Year(s)Expiration
Texas2016 - 2019December 2025
In 2021, Texas began an audit of tax years 2016 - 2019. As of Dec. 31, 2024, no material adjustments have been proposed.
Unrecognized tax benefit balance may include permanent tax positions, which if recognized would affect the ETR. In addition, the unrecognized tax benefit balance may include temporary tax positions for which deductibility is highly certain, but for which there is uncertainty about the timing. A change in the period of deductibility would not affect the ETR but would accelerate the payment to the taxing authority.
Unrecognized tax benefits — permanent vs temporary:
(Millions of Dollars)Dec. 31, 2024Dec. 31, 2023
Unrecognized tax benefit — Permanent tax positions$5 $5 
Unrecognized tax benefit — Temporary tax positions— — 
Total unrecognized tax benefit$5 $5 
Changes in unrecognized tax benefits:
(Millions of Dollars)202420232022
Balance at Jan. 1$5 $9 $8 
Additions based on tax positions related to the current year1 1 1 
Reductions for tax positions of prior years(1)(5)— 
Balance at Dec. 31$5 $5 $9 
Unrecognized tax benefits were reduced by tax benefits associated with tax credit carryforwards:
(Millions of Dollars)Dec. 31, 2024Dec. 31, 2023
Tax credit carryforwards$(4)$(4)
There exists approximately $5 million of noncurrent liabilities related to unrecognized tax benefits for which there is uncertainty about if or when these liabilities will significantly increase or decrease.
Payable for interest related to unrecognized tax benefits is partially offset by the interest benefit associated with tax credit carryforwards.
Interest payable related to unrecognized tax benefits:
(Millions of Dollars)202420232022
Payable for interest related to unrecognized tax benefits at Jan. 1$— $— $(1)
Interest benefit related to unrecognized tax benefits— — 1 
Payable for interest related to unrecognized tax benefits at Dec. 31$— $— $— 
No penalties were accrued related to unrecognized tax benefits as of Dec. 31, 2024, 2023 or 2022.