
Income Taxes	Year ended December 31
	2020		2019		2018
Income tax expense (benefit)
U.S. federal
Current	$	(182)	$	(73)	$	(181)
Deferred	(1,315)		(1,074)		738
State and local
Current	65		153		183
Deferred	(152)		(172)		(16)
Total United States	(1,584)		(1,166)		724
International
Current	1,833		4,577		4,662
Deferred	(2,141)		(720)		329
Total International	(308)		3,857		4,991
Total income tax expense (benefit)	$	(1,892)	$	2,691	$	5,715



	2020			2019			2018
Income (loss) before income taxes
United States	$	(5,700)		$	(5,483)		$	4,730
International	(1,753)			11,019			15,845
Total income (loss) before income taxes	(7,453)			5,536			20,575
Theoretical tax (at U.S. statutory rate of 21% )	(1,565)			1,163			4,321
Effect of U.S. tax reform	—			3			(26)
Equity affiliate accounting effect	211			(687)			(1,526)
Effect of income taxes from international operations*	(39)			2,196			3,132
State and local taxes on income, net of U.S. federal income tax benefit	(65)			(18)			162
Prior year tax adjustments, claims and settlements	(236)			192			(51)
Tax credits	(33)			(18)			(163)
Other U.S.*	(165)			(140)			(134)
Total income tax expense (benefit)	$	(1,892)		$	2,691		$	5,715

Effective income tax rate	25.4		%	48.6		%	27.8		%

The 2020 decrease in income tax expense of $4,583 is a result of the year-over-year decrease in total income before income tax expense, which is primarily due to lower crude oil prices in 2020, partially offset by lower impairment and write off

charges. The company’s effective tax rate changed from 49 percent in 2019 to 25 percent in 2020. The change in effective tax rate is a consequence of mix effect resulting from the absolute level of earnings or losses and whether they arose in higher or lower tax rate jurisdictions.


			At December 31
	2020		2019
Deferred tax liabilities
Properties, plant and equipment	$	16,603	$	17,251
Investments and other	5,617		5,372
Total deferred tax liabilities	22,220		22,623
Deferred tax assets
Foreign tax credits	(10,585)		(9,840)
Asset retirement obligations/environmental reserves	(4,721)		(4,329)
Employee benefits	(3,856)		(3,454)
Deferred credits	(1,056)		(1,083)
Tax loss carryforwards	(6,701)		(5,262)
Other accrued liabilities	(228)		(441)
Inventory	(633)		(662)
Operating leases	(1,234)		(1,211)
Miscellaneous	(3,685)		(2,796)
Total deferred tax assets	(32,699)		(29,078)
Deferred tax assets valuation allowance	17,762		15,965
Total deferred taxes, net	$	7,283	$	9,510

Deferred tax liabilities decreased by $403 from year-end 2019. The decrease to Properties, plant and equipment temporary differences was partially offset with an increase to Investments and other. The Properties, plant and equipment decrease was primarily due to upstream impairments. Deferred tax assets increased by $3,621 from year-end 2019. This increase was primarily related to increases in tax loss carryforwards for various locations, miscellaneous items related to foreign exchange and foreign tax credits acquired with the purchase of Noble.

The overall valuation allowance relates to deferred tax assets for U.S. foreign tax credit carryforwards, tax loss carryforwards and temporary differences. The valuation allowance reduces the deferred tax assets to amounts that are, in management’s assessment, more likely than not to be realized. At the end of 2020, the company had gross tax loss carryforwards of approximately $19,763 and tax credit carryforwards of approximately $1,056, primarily related to various international tax jurisdictions. Whereas some of these tax loss carryforwards do not have an expiration date, others expire at various times from 2021 through 2034. U.S. foreign tax credit carryforwards of $10,585 will expire between 2021 and 2030.


	At December 31
	2020		2019
Deferred charges and other assets	$	(5,286)	$	(4,178)
Noncurrent deferred income taxes	12,569		13,688
Total deferred income taxes, net	$	7,283	$	9,510

Income taxes are not accrued for unremitted earnings of international operations that have been or are intended to be reinvested indefinitely. The indefinite reinvestment assertion continues to apply for the purpose of determining deferred tax liabilities for U.S. state and foreign withholding tax purposes.

U.S. state and foreign withholding taxes are not accrued for unremitted earnings of international operations that have been or are intended to be reinvested indefinitely. Undistributed earnings of international consolidated subsidiaries and affiliates for which no deferred income tax provision has been made for possible future remittances totaled approximately $52,100 at December 31, 2020. This amount represents earnings reinvested as part of the company’s ongoing international business. It is not practicable to estimate the amount of state and foreign taxes that might be payable on the possible remittance of earnings that are intended to be reinvested indefinitely. The company does not anticipate incurring significant additional taxes on remittances of earnings that are not indefinitely reinvested.

Uncertain Income Tax Positions The company recognizes a tax benefit in the financial statements for an uncertain tax position only if management’s assessment is that the position is “more likely than not” (i.e., a likelihood greater than 50 percent) to be allowed by the tax jurisdiction based solely on the technical merits of the position. The term “tax position” in the accounting standards for income taxes refers to a position in a previously filed tax return or a position expected to be taken in a future tax return that is reflected in measuring current or deferred income tax assets and liabilities for interim or annual periods.

The following table indicates the changes to the company’s unrecognized tax benefits for the years ended December 31, 2020, 2019 and 2018. The term “unrecognized tax benefits” in the accounting standards for income taxes refers to the differences between a tax position taken or expected to be taken in a tax return and the benefit measured and recognized in the financial statements. Interest and penalties are not included.


	2020		2019		2018
Balance at January 1	$	4,987	$	5,070	$	4,828
Foreign currency effects	2		1		(6)
Additions based on tax positions taken in current year	253		94		239
Additions for tax positions taken in prior years	437		313		153
Reductions for tax positions taken in prior years	(216)		(194)		(131)
Settlements with taxing authorities in current year	(429)		(78)		(13)
Reductions as a result of a lapse of the applicable statute of limitations	(16)		(219)		—
Balance at December 31	$	5,018	$	4,987	$	5,070

Approximately 83 percent of the $5,018 of unrecognized tax benefits at December 31, 2020, would have an impact on the effective tax rate if subsequently recognized. Certain of these unrecognized tax benefits relate to tax carryforwards that may require a full valuation allowance at the time of any such recognition.

Tax positions for Chevron and its subsidiaries and affiliates are subject to income tax audits by many tax jurisdictions throughout the world. For the company’s major tax jurisdictions, examinations of tax returns for certain prior tax years had not been completed as of December 31, 2020. For these jurisdictions, the latest years for which income tax examinations had been finalized were as follows: United States – 2013, Nigeria – 2007, Australia – 2009 and Kazakhstan – 2012.

The company engages in ongoing discussions with tax authorities regarding the resolution of tax matters in the various jurisdictions. Both the outcome of these tax matters and the timing of resolution and/or closure of the tax audits are highly uncertain. However, it is reasonably possible that developments on tax matters in certain tax jurisdictions may result in significant increases or decreases in the company’s total unrecognized tax benefits within the next 12 months. 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.

On the Consolidated Statement of Income, the company reports interest and penalties related to liabilities for uncertain tax positions as “Income tax expense.” As of December 31, 2020, accrual benefit of $(95) for anticipated interest and penalty were included on the Consolidated Balance Sheet, compared with accrual charges of $30 as of year-end 2019. Income tax expense (benefit) associated with interest and penalties was $(124), $(3) and $8 in 2020, 2019 and 2018, respectively.