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Income Taxes (Tables) | 12 Months Ended
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Dec. 31, 2021
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) |  | 2021 |  | 2020 |  | 2019
Current income tax expense: |  |  |  |  |  |
U.S. federal |  | $ | 1,656 |  |  | $ | 1,122 |  |  | $ | 1,108 |
U.S. state and local |  | 351 |  |  | 339 |  |  | 276 |
Non-U.S. |  | 328 |  |  | 639 |  |  | 437 |
Total current income tax expense |  | 2,335 |  |  | 2,100 |  |  | 1,821 |
Deferred income tax (benefit) expense: |  |  |  |  |  |
U.S. federal |  | 231 |  |  | (931) |  |  | (58) |
U.S. state and local |  | 22 |  |  | (119) |  |  | (31) |
Non-U.S. |  | 41 |  |  | 111 |  |  | (62) |
Total deferred income tax (benefit) expense |  | 294 |  |  | (939) |  |  | (151) |
Total income tax expense |  | $ | 2,629 |  |  | $ | 1,161 |  |  | $ | 1,670 |
Effective income tax rate | A reconciliation of the U.S. federal statutory rate of 21 percent as of December 31, 2021, 2020 and 2019, to our actual income tax rate was as follows:
|  | 2021 |  | 2020 |  | 2019
U.S. statutory federal income tax rate |  | 21.0 | % |  | 21.0 | % |  | 21.0 | %
(Decrease) increase in taxes resulting from: |  |  |  |  |  |
Tax credits and tax-exempt income (a) |  | (0.1) |  |  | (4.1) |  |  | (1.9) |
State and local income taxes, net of federal benefit |  | 3.0 |  |  | 3.7 |  |  | 2.8 |
Non-U.S. subsidiaries' earnings |  | 1.1 |  |  | 2.4 |  |  | (0.5) |
Tax settlements |  | (0.1) |  |  | (0.3) |  |  | (0.3) |
Valuation allowances |  | — |  |  | 4.0 |  |  | (0.2) |
Other |  | (0.3) |  |  | 0.3 |  |  | (1.1) |
Actual tax rates |  | 24.6 | % |  | 27.0 | % |  | 19.8 | %
(a)Includes the implementation of PAM related to investments in QAH projects for the year ended December 31, 2021. Refer to Note 1 for further information.
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) |  | 2021 |  | 2020
Deferred tax assets: |  |  |  |
Reserves not yet deducted for tax purposes |  | $ | 3,637 |  |  | $ | 3,905 |
Employee compensation and benefits |  | 359 |  |  | 383 |
Net operating loss and tax credit carryforwards |  | 398 |  |  | 399 |
Other |  | 809 |  |  | 765 |
Gross deferred tax assets |  | 5,203 |  |  | 5,452 |
Valuation allowance |  | (472) |  |  | (418) |
Deferred tax assets after valuation allowance |  | 4,731 |  |  | 5,034 |
Deferred tax liabilities: |  |  |  |
Intangibles and fixed assets |  | 1,320 |  |  | 1,433 |
Deferred revenue |  | 189 |  |  | 252 |
Deferred interest |  | 133 |  |  | 148 |
Investment in joint ventures |  | 183 |  |  | 135 |
Other |  | 521 |  |  | 366 |
Gross deferred tax liabilities |  | 2,346 |  |  | 2,334 |
Net deferred tax assets |  | $ | 2,385 |  |  | $ | 2,700 |
Changes in unrecognized tax benefits | The following table presents changes in unrecognized tax benefits:
(Millions) |  | 2021 |  | 2020 |  | 2019
Balance, January 1 |  | $ | 790 |  |  | $ | 726 |  |  | $ | 701 |
Increases: |  |  |  |  |  |
Current year tax positions |  | 64 |  |  | 57 |  |  | 66 |
Tax positions related to prior years |  | 225 |  |  | 105 |  |  | 78 |
Effects of foreign currency translations |  | — |  |  | — |  |  | 10 |
Decreases: |  |  |  |  |  |
Tax positions related to prior years |  | (14) |  |  | (24) |  |  | (14) |
Settlements with tax authorities |  | (15) |  |  | (15) |  |  | (40) |
Lapse of statute of limitations |  | (17) |  |  | (58) |  |  | (75) |
Effects of foreign currency translations |  | (9) |  |  | (1) |  |  | — |
Balance, December 31 |  | $ | 1,024 |  |  | $ | 790 |  |  | $ | 726 |

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