Income Taxes (Tables)

12 Months Ended

Dec. 31, 2023

Schedule of Significant Components of Provision for Income Taxes Attributable to Continuing Operations

The following table presents significant components of the provision for income taxes attributable to continuing operations for the years ended December 31, 2023, 2022 and 2021.

Table 15.1: Significant Components of the Provision for Income Taxes Attributable to Continuing Operations


	Year Ended December 31,
(Dollars in millions)	2023		2022		2021
Current income tax provision:
Federal taxes	$	1,423	$	2,125	$	2,173
State taxes	382		423		485
International taxes	76		104		152
Total current provision	$	1,881	$	2,652	$	2,810
Deferred income tax provision (benefit):
Federal taxes	$	(547)	$	(662)	$	490
State taxes	(145)		(112)		91
International taxes	(31)		2		24
Total deferred provision (benefit)	(723)		(772)		605
Total income tax provision	$	1,158	$	1,880	$	3,415

Schedule of Effective Income Tax Rate

The following table presents the reconciliation of the U.S. federal statutory income tax rate to the effective income tax rate applicable to income from continuing operations for the years ended December 31, 2023, 2022 and 2021.

Table 15.2: Effective Income Tax Rate


	Year Ended December 31,
	2023		2022		2021
Income tax at U.S. federal statutory tax rate	21.0	%	21.0	%	21.0	%
State taxes, net of federal benefit	3.4		3.1		3.1
Non-deductible expenses	1.4		0.6		0.4
Affordable housing, new markets and other tax credits	(6.8)		(4.2)		(2.3)
Tax-exempt interest and other nontaxable income	(0.8)		(0.4)		(0.3)

Changes in valuation allowance	0.8		1.0		0.4
Other, net	0.2		(0.8)		(0.7)
Effective income tax rate	19.2	%	20.3	%	21.6	%

Schedule of Significant Components of Deferred Tax Assets and Liabilities

The following table presents significant components of our deferred tax assets and liabilities as of December 31, 2023 and 2022. The valuation allowance below represents the adjustment of our foreign tax credit carryforward, certain state deferred tax assets and net operating loss carryforwards to the amount we have determined is more likely than not to be realized.

Table 15.3: Significant Components of Deferred Tax Assets and Liabilities


(Dollars in millions)	December 31, 2023		December 31, 2022
Deferred tax assets:
Allowance for credit losses	$	3,538	$	3,025
Security and loan valuations	2,223		2,497
Rewards programs	801		790
Net operating loss and tax credit carryforwards	514		437
Net unrealized loss on derivatives	470		689
Compensation and employee benefits	444		411
Lease liabilities	314		346



Fixed assets and leases	278		190
Partnership investments	272		253
Other assets	388		317
Subtotal	9,242		8,955
Valuation allowance	(496)		(446)
Total deferred tax assets	8,746		8,509
Deferred tax liabilities:
Right-of-use assets	253		284
Original issue discount	121		241
Partnership investments	148		119
Mortgage servicing rights	85		95
Loan Fees & Expenses	48		52


Goodwill and intangibles	57		0
Other liabilities	95		59
Total deferred tax liabilities	807		850
Net deferred tax assets	$	7,939	$	7,659

Schedule of Reconciliation of Change in Unrecognized Tax Benefits

The following table presents the accrued balance of tax, interest and penalties related to unrecognized tax benefits.

Table 15.4: Reconciliation of the Change in Unrecognized Tax Benefits


(Dollars in millions)	Gross Unrecognized Tax Benefits		Accrued Interest and Penalties		Gross Tax, Interest and Penalties
Balance as of January 1, 2021	$	451	$	46	$	497

Additions for tax positions related to prior years	1		4		5
Reductions for tax positions related to prior years due to IRS and other settlements	(47)		(36)		(83)
Balance as of December 31, 2021	405		14		419
Additions for tax positions related to the current year	3		0		3
Additions for tax positions related to prior years	14		6		20
Reductions for tax positions related to prior years due to IRS and other settlements	(381)		(10)		(391)
Balance as of December 31, 2022	41		10		51
Additions for tax positions related to the current year	2		0		2
Additions for tax positions related to prior years	10		4		14
Reductions for tax positions related to prior years due to IRS and other settlements	(20)		(7)		(27)
Balance as of December 31, 2023	$	33	$	7	$	40
Portion of balance at December 31, 2023 that, if recognized, would impact the effective income tax rate	$	27	$	6	$	33