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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Income Tax Provisions Federal and foreign income tax expense for continuing operations consisted of the following (in millions):
|  | 2024 |  | 2023 |  | 2022
Federal income tax expense (benefit): |  |  |  |  |  |
Current |  | $ | 1,352 |  |  | $ | 1,574 |  |  | $ | 1,618 |
Deferred |  | (604) |  |  | (503) |  |  | (776) |
Total federal income tax expense |  | 748 |  |  | 1,071 |  |  | 842 |
Foreign income tax expense: |  |  |  |  |  |
Current |  | 120 |  |  | 102 |  |  | 87 |
Deferred |  | 16 |  |  | 5 |  |  | 19 |
Total foreign income tax expense |  | 136 |  |  | 107 |  |  | 106 |
Total federal and foreign income tax expense |  | $ | 884 |  |  | $ | 1,178 |  |  | $ | 948 |
Our total net state income tax expense was $121 million for 2024, $115 million for 2023, and $124 million for 2022. State income taxes are allowable costs in establishing prices for the products and services we sell to the U.S. Government. Therefore, state income tax expenses are included in our cost of sales, as general and administrative costs. As a result, the impact of certain transactions on our operating profit and of other matters presented in these consolidated financial statements is disclosed net of state income taxes. A reconciliation of the U.S. federal statutory income tax expense to actual income tax expense for continuing operations is as follows (in millions):
|  | 2024 |  | 2023 |  | 2022
|  | Amount |  | Rate |  | Amount |  | Rate |  | Amount |  | Rate
Income tax expense at the U.S. federal statutory tax rate |  | $ | 1,306 |  |  | 21.0 | % |  | $ | 1,701 |  |  | 21.0 | % |  | $ | 1,403 |  |  | 21.0 | %
Foreign derived intangible income deduction |  | (210) |  |  | (3.4) |  |  | (185) |  |  | (2.3) |  |  | (176) |  |  | (2.6) |
Research and development tax credit |  | (207) |  |  | (3.3) |  |  | (227) |  |  | (2.8) |  |  | (178) |  |  | (2.7) |
Tax deductible dividends |  | (69) |  |  | (1.1) |  |  | (69) |  |  | (0.9) |  |  | (67) |  |  | (1.0) |
Excess tax benefits for stock-based payment awards |  | (20) |  |  | (0.3) |  |  | (25) |  |  | (0.3) |  |  | (42) |  |  | (0.6) |
Other, net (a) |  | 84 |  |  | 1.3 |  |  | (17) |  |  | (0.2) |  |  | 8 |  |  | 0.1 |
Income tax expense |  | $ | 884 |  |  | 14.2 | % |  | $ | 1,178 |  |  | 14.5 | % |  | $ | 948 |  |  | 14.2 | %
(a)Other, net includes foreign income tax expenses for all years. The rates for all periods benefited from tax deductions for foreign derived intangible income, research and development tax credits, dividends paid to our defined contribution plans with an employee stock ownership plan feature and employee equity awards. Uncertain Tax Positions The change in unrecognized tax benefits were as follows (in millions):
|  | 2024 |  | 2023 |  | 2022
Balance at January 1 |  | $ | 146 |  |  | $ | 1,622 |  |  | $ | 69 |
Additions based on tax positions related to the current year |  | 78 |  |  | 50 |  |  | 1,572 |
Additions for tax positions of prior years |  | 8 |  |  | 32 |  |  | 5 |
Reductions for tax positions of prior years |  | (2) |  |  | (1,526) |  |  | (2) |
Settlements with tax authorities |  | — |  |  | (33) |  |  | (23) |
Other, net |  | (1) |  |  | 1 |  |  | 1 |
Balance at December 31 |  | $ | 229 |  |  | $ | 146 |  |  | $ | 1,622 |
As of December 31, 2024, our liabilities associated with uncertain tax positions were $229 million compared to $146 million as of December 31, 2023. The increase in uncertain tax positions did not have a material impact to our effective tax rate and if these uncertain tax positions were to be recognized in future periods, the impact will not be material. As of December 31, 2022, our liabilities associated with uncertain tax positions were $1.6 billion. The decrease from 2022 to 2023 with a corresponding decrease to net deferred tax assets primarily resulted from our analysis of IRS Notice 2023-63 released on September 8, 2023 confirming that certain expenditures incurred in the performance of cost-type contracts are not subject to research and development capitalization. The reduction in uncertain tax positions did not have a material impact to our effective tax rate. Additionally, we recognize accrued interest and penalties related to unrecognized tax benefits as part of our income tax expense. For the years ended December 31, 2024, 2023 and 2022, our accrued interest and penalties related to unrecognized tax benefits were not material. Deferred Income Taxes The primary components of our federal and foreign deferred income tax assets and liabilities at December 31 were as follows (in millions):
|  | 2024 |  | 2023
Deferred tax assets related to: |  |  |  |
Pensions |  | $ | 1,184 |  |  | $ | 1,485 |
Accrued compensation and benefits |  | 741 |  |  | 731 |
Contract accounting methods |  | 949 |  |  | 508 |
Research and development expenditures |  | 1,643 |  |  | 1,251 |
Domestic company operating losses (a) |  | 83 |  |  | — |
Foreign company operating losses and credits |  | 6 |  |  | 19 |
Other (b) |  | 522 |  |  | 487 |
Valuation allowance |  | (41) |  |  | (32) |
Deferred tax assets, net |  | 5,087 |  |  | 4,449 |
Deferred tax liabilities related to: |  |  |  |
Goodwill and intangible assets |  | 545 |  |  | 494 |
Property, plant and equipment |  | 371 |  |  | 415 |
Other (b) |  | 638 |  |  | 597 |
Deferred tax liabilities |  | 1,554 |  |  | 1,506 |
Net deferred tax assets |  | $ | 3,533 |  |  | $ | 2,943 |
(a)Federal net operating losses obtained in the Terran Orbital transaction described above which do not expire. (b)Includes deferred tax assets and liabilities related to lease liability and ROU asset. We and our subsidiaries file federal income tax returns in the U.S. and income tax returns in various foreign jurisdictions. With few exceptions, the statute of limitations for these jurisdictions is no longer open for audit or examination for the years before 2016 with respect to various foreign jurisdictions and before 2018 for federal income taxes in the U.S. We withdrew from the IRS Compliance Assurance Process (CAP) program in 2022 starting with our 2021 tax return. Examinations of the years 2018 to 2021 remain under IRS review. We are also subject to taxation in various states and foreign jurisdictions including Australia, Canada, India, Italy, Japan, Poland, and the United Kingdom. We are under, or may be subject to, audit or examination and additional assessments by the relevant authorities. Our federal and foreign income tax payments, net of refunds, were $1.3 billion in 2024, $1.8 billion in 2023 and $1.6 billion in 2022.

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