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Income Taxes | 12 Months Ended
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Dec. 31, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The income tax provision for continuing operations consisted of the following for the years ended December 31, 2022, 2021 and 2020:
In millions | 2022 |  | 2021 |  | 2020
Current: |  |  |  |  |
Federal | $ | 2,803 |  |  | $ | 2,285 |  |  | $ | 2,615 |
State | 735 |  |  | 665 |  |  | 518 |
| 3,538 |  |  | 2,950 |  |  | 3,133 |
Deferred: |  |  |  |  |
Federal | (1,569) |  |  | (306) |  |  | (450) |
State | (506) |  |  | (122) |  |  | (114) |
| (2,075) |  |  | (428) |  |  | (564) |
Total | $ | 1,463 |  |  | $ | 2,522 |  |  | $ | 2,569 |
The following table is a reconciliation of the statutory income tax rate to the Company’s effective income tax rate for continuing operations for the years ended December 31, 2022, 2021 and 2020:
| 2022 |  | 2021 |  | 2020
Statutory income tax rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State income taxes, net of federal tax benefit | 3.2 |  |  | 4.1 |  |  | 3.2 |
Health insurer fee | — |  |  | — |  |  | 2.2 |
Legal charges | 3.5 |  |  | — |  |  | — |
Basis difference upon disposition of subsidiary | 1.7 |  |  | — |  |  | (1.2) |
Prior year refunds and unrecognized tax benefits | (2.7) |  |  | (1.2) |  |  | — |
Other | (0.7) |  |  | 0.3 |  |  | 1.1 |
Effective income tax rate | 26.0 | % |  | 24.2 | % |  | 26.3 | %
The following table is a summary of the components of the Company’s deferred income tax assets and liabilities as of December 31, 2022 and 2021:
In millions | 2022 |  | 2021
Deferred income tax assets: |  |  |
Lease and rents | $ | 5,242 |  |  | $ | 5,563 |
Legal charges | 1,260 |  |  | 19 |
Inventory | 103 |  |  | 99 |
Employee benefits | 153 |  |  | 193 |
Bad debts and other allowances | 480 |  |  | 489 |
Net operating loss and capital loss carryforwards | 266 |  |  | 416 |
Deferred income | 66 |  |  | 78 |
Insurance reserves | 455 |  |  | 501 |
Investments | 293 |  |  | — |
Payroll tax deferral | — |  |  | 87 |
Other | 335 |  |  | 377 |
Valuation allowance | (532) |  |  | (325) |
Total deferred income tax assets (1) | 8,121 |  |  | 7,497 |
Deferred income tax liabilities: |  |  |
Retirement benefits | (92) |  |  | (105) |
Investments | — |  |  | (334) |
Lease and rents | (4,639) |  |  | (4,947) |
Depreciation and amortization | (7,139) |  |  | (8,381) |
Total deferred income tax liabilities | (11,870) |  |  | (13,767) |
Net deferred income tax liabilities | $ | (3,749) |  |  | $ | (6,270) |
_____________________________________________ (1)Includes deferred income tax assets of $131 million which have been accounted for as assets held for sale and are included in assets held for sale on the consolidated balance sheet at December 31, 2022. See Note 2 ‘‘Acquisitions, Divestitures and Asset Sales’’ for additional information. When evaluating the realizability of deferred tax assets, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and the Company’s recent operating results. The Company established valuation allowances of $532 million and $325 million as of December 31, 2022 and 2021, respectively, because it does not consider it more likely than not that certain deferred tax assets will be recovered. As of December 31, 2022, the Company had net operating and capital loss carryovers of $266 million, which expire between 2023 and 2042. A reconciliation of the beginning and ending balance of unrecognized tax benefits in 2022, 2021 and 2020 is as follows:
In millions | 2022 |  | 2021 |  | 2020
Beginning balance | $ | 782 |  |  | $ | 768 |  |  | $ | 655 |
Additions based on tax positions related to the current year | 5 |  |  | 3 |  |  | 3 |
Additions based on tax positions related to prior years | 42 |  |  | 52 |  |  | 182 |
Reductions for tax positions of prior years | (166) |  |  | (33) |  |  | (56) |
Expiration of statutes of limitation | (4) |  |  | (1) |  |  | (2) |
Settlements | (213) |  |  | (7) |  |  | (14) |
Ending balance | $ | 446 |  |  | $ | 782 |  |  | $ | 768 |
CVS Health Corporation and most of its subsidiaries are subject to U.S. federal income tax as well as income tax of numerous state and local jurisdictions. CVS Health Corporation participated in the Compliance Assurance Process through 2019, which is a program made available by the U.S. Internal Revenue Service (“IRS”) to certain qualifying large taxpayers, under which participants work collaboratively with the IRS to identify and resolve potential tax issues through open, cooperative and transparent interaction prior to the annual filing of their federal income tax returns. The IRS has completed its examinations of the Company’s consolidated U.S. federal income tax returns for tax years through and including 2013 and 2018 through 2019. The IRS has substantially completed its examinations of the Company’s consolidated U.S. federal income tax returns for tax years 2014 through 2017. CVS Health Corporation and its subsidiaries are also currently under income tax examinations by a number of state and local tax authorities. As of December 31, 2022, no examination has resulted in any proposed adjustments that would result in a material change to the Company’s operating results, financial condition or liquidity. Substantially all material state and local income tax matters have been concluded for fiscal years through 2015. Certain state exams are likely to be concluded and certain state statutes of limitations will lapse in 2023, but the change in the balance of the Company’s uncertain tax positions is projected to be immaterial. In addition, it is reasonably possible that the Company’s unrecognized tax benefits could change within the next twelve months due to the anticipated conclusion of various examinations with the IRS for certain previous years. An estimate of the range of the possible change cannot be made at this time. The Company records interest expense related to unrecognized tax benefits and penalties in the income tax provision. The Company accrued interest expense of approximately $29 million, $40 million and $34 million in 2022, 2021 and 2020, respectively. The Company had approximately $112 million and $151 million accrued for interest and penalties as of December 31, 2022 and 2021, respectively. As of December 31, 2022, the total amount of unrecognized tax benefits that, if recognized, would affect the Company’s effective income tax rate is approximately $336 million, after considering the federal benefit of state income taxes.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI https://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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