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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes
| 2024 |  | 2023 |  | 2022
| ($ in millions)
Current: |  |  |  |  |
Federal | $ | 445 |  |  | $ | 437 |  |  | $ | 645 |
State | 86 |  |  | 105 |  |  | 132 |
Total current taxes | 531 |  |  | 542 |  |  | 777 |
Deferred: |  |  |  |  |
Federal | 198 |  |  | (27) |  |  | 206 |
State | (22) |  |  | (22) |  |  | (123) |
Total deferred taxes | 176 |  |  | (49) |  |  | 83 |
Income taxes | $ | 707 |  |  | $ | 493 |  |  | $ | 860 |
During 2024, we recorded a $27 million deferred income tax benefit as a result of a subsidiary restructuring. Reconciliation of Statutory Rate to Effective Rate “Income taxes” on the Consolidated Statements of Income differs from the amounts computed by applying the statutory federal corporate tax rate as follows:
| 2024 |  | 2023 |  | 2022
| Amount |  | % |  | Amount |  | % |  | Amount |  | %
| ($ in millions)
Federal income tax at statutory rate | $ | 699 |  |  | 21.0 |  |  | $ | 487 |  |  | 21.0 |  |  | $ | 867 |  |  | 21.0 |
State income taxes, net of federal tax effect | 66 |  |  | 2.0 |  |  | 65 |  |  | 2.9 |  |  | 143 |  |  | 3.5 |
Tax credits | (14) |  |  | (0.4) |  |  | (27) |  |  | (1.2) |  |  | (10) |  |  | (0.2) |
State law changes | (15) |  |  | (0.4) |  |  | — |  |  | — |  |  | (136) |  |  | (3.3) |
Other, net | (29) |  |  | (1.0) |  |  | (32) |  |  | (1.4) |  |  | (4) |  |  | (0.2) |
Income taxes | $ | 707 |  |  | 21.2 |  |  | $ | 493 |  |  | 21.3 |  |  | $ | 860 |  |  | 20.8 |
On July 8, 2022, House Bill 1342 was signed into law in the Commonwealth of Pennsylvania, which reduced its corporate income tax rate from 9.99% to 4.99%, through a series of phased reductions beginning each tax year from January 1, 2023 through January 1, 2031. GAAP requires companies to recognize the effect of tax law changes in the period of enactment. As a result, in 2022, we recognized a $136 million benefit in “Income taxes” with a corresponding reduction in “Deferred income taxes.” Deferred Tax Assets and Liabilities Certain items are reported in different periods for financial reporting and income tax purposes. Deferred tax assets and liabilities are recorded in recognition of these differences. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows:
| December 31,
| 2024 |  | 2023
| ($ in millions)
Deferred tax assets: |  |  |
Accruals, including casualty and other claims | $ | 289 |  |  | $ | 360 |
Compensation and benefits, including postretirement benefits | 21 |  |  | 55 |
Other | 157 |  |  | 155 |
Total gross deferred tax assets | 467 |  |  | 570 |
Less valuation allowance | (42) |  |  | (31) |
Net deferred tax assets | 425 |  |  | 539 |
Deferred tax liabilities: |  |  |
Property | (7,397) |  |  | (7,218) |
Other | (448) |  |  | (546) |
Total deferred tax liabilities | (7,845) |  |  | (7,764) |
Deferred income taxes | $ | (7,420) |  |  | $ | (7,225) |
Except for amounts for which a valuation allowance has been provided, we believe that it is more likely than not that the results of future operations will generate sufficient taxable income to realize the deferred tax assets. The valuation allowance at the end of each year primarily relates to subsidiary state income tax net operating losses and state investment tax credits that may not be utilized prior to their expiration. The total valuation allowance increased by $11 million in 2024, decreased by $10 million in 2023, and decreased by $19 million in 2022. Uncertain Tax Positions A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
| December 31,
| 2024 |  | 2023
| ($ in millions)
Balance at beginning of year | $ | 55 |  |  | $ | 22 |
Additions based on tax positions related to the current year | 26 |  |  | 30 |
Additions for tax positions of prior years | 3 |  |  | 9 |
Reductions for tax positions of prior years | (1) |  |  | (1) |
Lapse of statutes of limitations | (1) |  |  | (5) |
Balance at end of year | $ | 82 |  |  | $ | 55 |
Included in the balance of unrecognized tax benefits at December 31, 2024 are potential benefits of $66 million that would affect the effective tax rate if recognized. Unrecognized tax benefits are adjusted in the period in which new information about a tax position becomes available or the final outcome differs from the amount recorded. The statute of limitations on Internal Revenue Service examinations has expired for all years prior to 2019. Our consolidated federal income tax returns for 2019 through 2021 are currently being audited by the IRS. We anticipate that the IRS will complete its examination in 2025. State income tax returns are generally subject to examination for a period of three to four years after the return. In addition, we are generally obligated to report changes in taxable income arising from federal income tax examinations to the states within a period of up to two years from the date the federal examination is final. We have various state income tax returns either under examination, administrative appeal, or litigation.

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