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Income Taxes (Tables) | 12 Months Ended
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Dec. 31, 2020
Income Tax Disclosure [Abstract] |
Components of income tax expense | The components of income tax expense for the years ended December 31 included in the Consolidated Statements of Income were as follows:
(Millions) |  | 2020 |  | 2019 |  | 2018
Current income tax expense: |  |  |  |  |  |
U.S. federal |  | $ | 1,122 |  |  | $ | 1,108 |  |  | $ | 70 |
U.S. state and local |  | 339 |  |  | 276 |  |  | 150 |
Non-U.S. |  | 639 |  |  | 437 |  |  | 681 |
Total current income tax expense |  | 2,100 |  |  | 1,821 |  |  | 901 |
Deferred income tax (benefit) expense: |  |  |  |  |  |
U.S. federal |  | (931) |  |  | (58) |  |  | 276 |
U.S. state and local |  | (119) |  |  | (31) |  |  | 78 |
Non-U.S. |  | 111 |  |  | (62) |  |  | (54) |
Total deferred income tax (benefit) expense |  | (939) |  |  | (151) |  |  | 300 |
Total income tax expense |  | $ | 1,161 |  |  | $ | 1,670 |  |  | $ | 1,201 |
Effective income tax rate | A reconciliation of the U.S. federal statutory rate of 21 percent as of December 31, 2020, 2019 and 2018, to our actual income tax rate was as follows:
|  | 2020 |  | 2019 |  | 2018
U.S. statutory federal income tax rate |  | 21.0 | % |  | 21.0 | % |  | 21.0 | %
(Decrease) increase in taxes resulting from: |  |  |  |  |  |
Tax-exempt income |  | (4.1) |  |  | (1.9) |  |  | (1.7) |
State and local income taxes, net of federal benefit |  | 3.7 |  |  | 2.8 |  |  | 2.8 |
Non-U.S. subsidiaries' earnings |  | 2.4 |  |  | (0.5) |  |  | (1.0) |
Tax settlements(a) |  | (0.3) |  |  | (0.3) |  |  | (1.9) |
U.S. Tax Act and related adjustments(b) |  | — |  |  | — |  |  | (4.3) |
Valuation allowances |  | 4.0 |  |  | (0.2) |  |  | 0.5 |
Other |  | 0.3 |  |  | (1.1) |  |  | (0.6) |
Actual tax rates |  | 27.0 | % |  | 19.8 | % |  | 14.8 | %
(a)2018 primarily included a settlement of the IRS examination for tax years 2008-2014, as well as the resolution of certain tax matters in various jurisdictions. (b)2018 included changes to the tax method of accounting for certain expenses and adjustments to the 2017 provisional Tax Act charge.
Components of deferred tax assets and liabilities | The significant components of deferred tax assets and liabilities as of December 31 are reflected in the following table:
(Millions) |  | 2020 |  | 2019
Deferred tax assets: |  |  |  |
Reserves not yet deducted for tax purposes |  | $ | 3,905 |  |  | $ | 2,633 |
Employee compensation and benefits |  | 383 |  |  | 365 |
Net operating loss and tax credit carryforwards |  | 399 |  |  | 119 |
Other |  | 765 |  |  | 417 |
Gross deferred tax assets |  | 5,452 |  |  | 3,534 |
Valuation allowance |  | (418) |  |  | (66) |
Deferred tax assets after valuation allowance |  | 5,034 |  |  | 3,468 |
Deferred tax liabilities: |  |  |  |
Intangibles and fixed assets |  | 1,433 |  |  | 1,279 |
Deferred revenue |  | 252 |  |  | 315 |
Deferred interest |  | 148 |  |  | 162 |
Investment in joint ventures |  | 135 |  |  | 122 |
Other |  | 366 |  |  | 129 |
Gross deferred tax liabilities |  | 2,334 |  |  | 2,007 |
Net deferred tax assets |  | $ | 2,700 |  |  | $ | 1,461 |
Changes in unrecognized tax benefits | The following table presents changes in unrecognized tax benefits:
(Millions) |  | 2020 |  | 2019 |  | 2018
Balance, January 1 |  | $ | 726 |  |  | $ | 701 |  |  | $ | 821 |
Increases: |  |  |  |  |  |
Current year tax positions |  | 57 |  |  | 66 |  |  | 152 |
Tax positions related to prior years |  | 105 |  |  | 78 |  |  | 47 |
Effects of foreign currency translations |  | — |  |  | 10 |  |  | — |
Decreases: |  |  |  |  |  |
Tax positions related to prior years |  | (24) |  |  | (14) |  |  | (74) |
Settlements with tax authorities(a) |  | (15) |  |  | (40) |  |  | (192) |
Lapse of statute of limitations |  | (58) |  |  | (75) |  |  | (44) |
Effects of foreign currency translations |  | (1) |  |  | — |  |  | (9) |
Balance, December 31 |  | $ | 790 |  |  | $ | 726 |  |  | $ | 701 |
(a)2018 included a settlement of the IRS examination for tax years 2008-2014 and the resolution of certain tax matters in various jurisdictions.

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