Income Taxes

6 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The income tax expense decreased between quarterly periods from $4.3 billion in 2022 to $1.8 billion in 2023. The company’s income before income tax expense decreased $8.2 billion from $16.0 billion in 2022 to $7.8 billion in 2023, primarily due to lower upstream realizations and downstream margins. The company’s effective tax rate decreased between quarterly periods from 27 percent in 2022 to 23 percent in 2023. The change in effective tax rate is primarily a consequence of mix effects, resulting from the absolute level of earnings or losses and whether they arose in higher or lower tax rate jurisdictions, and favorable tax items.

The income tax expense decreased between the six-month periods from $7.1 billion in 2022 to $4.7 billion in 2023. This decrease is a direct result of a decrease in the company’s income before income tax expense of $7.7 billion, from $25.1 billion in 2022 to $17.4 billion in 2023. The decrease in income is primarily due to lower upstream realizations and downstream margins. The company’s effective tax rate decreased between six-month periods from 28 percent in 2022 to 27 percent in 2023. The change in effective tax rate is primarily a consequence of mix effects, resulting from the absolute level of earnings or losses and whether they arose in higher or lower tax rate jurisdictions.

The company engages in ongoing discussions with tax authorities regarding the resolution of tax matters in various jurisdictions. Both the outcomes for these tax matters and the timing of resolution and/or closure of the tax audits are highly uncertain. Given the number of years that still remain subject to examination and the number of matters being examined in the various tax jurisdictions, the company is unable to estimate the range of possible adjustments to the balance of unrecognized tax benefits beyond the next 12 months.