Income Taxes

12 Months Ended

Dec. 31, 2024

Income Taxes [Abstract]

Income Taxes

Income Taxes

Income tax expense (benefit) was as follows (in millions):

	Years ended December 31,
	2024		2023		2022
Current:
Federal	$	1,052	$	1,193	$	1,468
State	202		235		284
Total current	1,254		1,428		1,752
Deferred:
Federal	299		174		88
State	64		(75)		(78)
Total deferred	363		99		10
Total	$	1,617	$	1,527	$	1,762

Reconciliation of the U.S. federal statutory income tax rate to the effective tax rate was as follows:

	Years ended December 31,
	2024		2023		2022
U.S. Federal statutory income tax rate	21.0	%	21.0	%	21.0	%
State income taxes, net of federal tax benefit	3.2		1.9		1.9
Other, net	0.1		0.2		—
Effective tax rate	24.3	%	23.1	%	22.9	%

The components of deferred tax assets and liabilities were as follows (in millions):

	December 31, 2024		December 31, 2023
Deferred tax liabilities:
Property and equipment	$	(15,346)	$	(14,989)
Operating lease right-of-use assets	(243)		(203)
Other	(806)		(682)
Total deferred tax liabilities	(16,395)		(15,874)
Deferred tax assets:
Operating lease liabilities	239		201
Compensation and benefits	168		173
Casualty and environmental	96		102
Other	196		176
Total deferred tax assets	699		652
Net deferred tax liability	$	(15,696)	$	(15,222)

BNSF is included in the consolidated U.S. federal income tax return of Berkshire. BNSF’s tax expense and liabilities have been computed on a stand-alone basis, and all of its currently payable federal income taxes are remitted to Berkshire. See Note 16 to the Consolidated Financial Statements for information related to income taxes paid to Berkshire during 2024.

All U.S. federal income tax returns of BNSF are closed for audit through the tax period ended December 31, 2013. BNSF is currently under examination for the years 2014 through 2019 as part of Berkshire's consolidated U.S. federal income tax return.

BNSF has various state income tax returns in the process of examination, administrative appeal or litigation. State income tax returns are generally subject to examination for a period of three to five years after filing of the respective return. The state impact of any federal changes remains subject to examination by various states for a period of up to one year after formal notification to the states.

Uncertain Tax Positions

The amount of unrecognized tax benefits for the years ended December 31, 2024, 2023 and 2022, was $48 million, $47 million and $52 million, respectively. The amount of unrecognized tax benefits as of December 31, 2024 that would affect the Company’s effective tax rate if recognized was $39 million, computed at the federal income tax rate expected to be applicable in the taxable period in which the amount may be incurred by the Company. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in millions):

	Years ended December 31,
	2024		2023		2022
Beginning balance	$	47	$	52	$	46
Additions for tax positions related to current year	8		6		11
Additions (reductions) for tax positions taken in prior years	1		(2)		—
Additions (reductions) for tax positions as a result of:
Lapse of statute of limitations	(8)		(9)		(5)
Ending balance	$	48	$	47	$	52

It is expected that the amount of unrecognized tax benefits will change in the next twelve months; however, BNSF does not expect the change to have a significant impact on the results of operations, the financial position or the cash flows of the Company.

The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in income tax expense in the Consolidated Statements of Income. The Company had recorded a liability of approximately $10 million and $9 million for interest for the years ended December 31, 2024 and 2023, respectively.