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Income Taxes
 6 Months Ended
Jun. 30, 2023
Income Taxes  
Income Taxes

4.    Income Taxes

Our effective income tax rate was 24.2% and 23.9% for the three and six months ended June 30, 2023, respectively, compared with 24.3% and 23.9% for the three and six months ended June 30, 2022, respectively. We evaluate our effective income tax rate at each interim period and adjust it as facts and circumstances warrant.

Investments Qualifying for Federal Tax Credits — We have significant financial interests in entities established to invest in and manage low-income housing properties. We support the operations of these entities in exchange for a pro-rata share of the tax credits they generate. The low-income housing investments qualify for federal tax credits that we expect to realize through 2033 under Section 42 or Section 45D of the Internal Revenue Code.

We account for our investments in these entities using the equity method of accounting, recognizing our share of each entity’s results of operations and other reductions in the value of our investments in equity in net losses of unconsolidated entities, within our Condensed Consolidated Statements of Operations. During the three and six months ended June 30, 2023, we recognized $12 million and $25 million of net losses, respectively, and a reduction in our income tax expense of $26 million and $48 million, respectively, primarily due to federal tax credits realized from these investments as well as the tax benefits from the pre-tax losses realized. In addition, during the three and six months ended June 30, 2023, we recognized interest expense of $3 million and $7 million, respectively, associated with our investments in low-income housing properties.

During the three and six months ended June 30, 2022, we recognized $17 million and $31 million of net losses, respectively, and a reduction in our income tax expense of $25 million and $48 million, respectively, primarily due to federal tax credits realized from these investments as well as the tax benefits from the pre-tax losses realized. In addition, during the three and six months ended June 30, 2022, we recognized interest expense of $4 million and $6 million, respectively, associated with our investments in low-income housing properties. See Note 13 for additional information related to these unconsolidated variable interest entities.

Equity-Based Compensation – During the three and six months ended June 30, 2023, we recognized a reduction in our income tax expense of $3 million and $10 million, respectively, for excess tax benefits related to the vesting or exercise of equity-based compensation awards compared with $2 million and $12 million, respectively, for the comparable prior year periods.