The Company and its eligible domestic subsidiaries file a U.S. consolidated federal income tax return. The Company also files tax returns in various states and foreign jurisdictions. Tax liabilities and benefits realized by the consolidated group are allocated as generated by the respective entities.

Deferred income taxes result from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements that will result in taxable or deductible amounts in future years. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in years in which those temporary differences are expected to be recovered or settled. Deferred tax assets and liabilities are adjusted through income tax expense as changes in tax laws or rates are enacted.

Inflation Reduction Act of 2022 The Inflation Reduction Act of 2022 (“Act”), which contains several tax-related provisions, was signed into law in August 2022. The Act creates a 15% corporate alternative

minimum tax (“CAMT”) on certain large corporations and an excise tax of 1% on stock repurchases by publicly traded U.S. corporations, both effective after December 31, 2022. The excise tax on common stock repurchases will be classified as an additional cost of the stock acquired included in treasury stock in shareholders' equity. The Company has determined that it is considered an “applicable corporation” under the rules of CAMT, and as such, it is expected to perform the CAMT computation starting January 1, 2023; however, a reasonable estimate cannot be made as of the filing date.

Coronavirus Aid, Relief and Economic Security Act The Company qualified and claimed certain employer payroll tax credits that are allowed under the Coronavirus Aid, Relief and Economic Security Act. For the year ended December 31, 2022 and 2021, the Company recorded $3 million and $21 million of refundable employee retention tax credits reported in property and casualty claims and claims expense in the Consolidated Statements of Operations, respectively.

Regulatory tax examinations On January 4, 2021 and October 1, 2021, the Company acquired National General and SafeAuto, respectively. For tax years prior to the acquisition, National General is subject to separate Internal Revenue Service (“IRS”) audits. The IRS has completed its exam of Allstate’s tax years prior to 2017 and National General tax years prior to 2015. Currently, the Company is under exam for the 2017 and 2018 tax years and National General is under exam for the 2015 through 2019 tax years. The Company believes that adequate provision has been made in the Consolidated Financial Statements for any potential adjustments that may result from IRS examinations or any other tax authorities related to all open tax years.

Unrecognized tax benefits The Company recognizes tax positions in the consolidated financial statements only when it is more likely than not that the position will be sustained on examination by the relevant taxing authority based on the technical merits of the position. A position that meets this standard is measured at the largest amount of benefit that will more likely than not be realized on settlement. A liability is established for differences between positions taken in a tax return and amounts recognized in the consolidated financial statements.


Reconciliation of the change in the amount of unrecognized tax benefits
	For the years ended December 31,
($ in millions)	2022		2021		2020
Balance – beginning of year	$	17	$	12	$	70
Acquisitions	—		5		—




Decrease for settlements	—		—		(58)

Balance – end of year	$	17	$	17	$	12

The Company believes that it is reasonably possible that a portion of the unrecognized tax benefits could decrease within the next twelve months as a result of the lapse of the applicable statute of limitations.


Components of the deferred income tax assets and liabilities
	As of December 31,
($ in millions)	2022		2021
Deferred tax assets
Unearned premium reserves	$	815	$	742
Unrealized net capital losses	608		—
Discount on loss reserves	228		169
Research & development capitalization	219		—
Accrued compensation	128		151

Net operating loss carryover	97		88
Other postretirement benefits	15		31
Pension	10		—

Other assets	95		90
Total deferred tax assets before valuation allowance	2,215		1,271
Valuation allowance	(34)		(24)
Total deferred tax assets after valuation allowance	2,181		1,247
Deferred tax liabilities
DAC	(1,013)		(924)
Investments	(431)		(666)
Intangible assets	(147)		(219)

Unrealized net capital gains	—		(163)
Pension	—		(9)
Other liabilities	(204)		(99)
Total deferred tax liabilities	(1,795)		(2,080)
Net deferred tax assets (liabilities)	$	386	$	(833)

As of December 31, 2022, the Company has U.S. federal and foreign net operating loss (“NOL”) carryforwards, some of which will expire on various dates from 2025 through 2037 as indicated in the table below. In assessing the realizability of gross deferred tax assets, management considers whether it is more likely than not that some portion or all of the gross deferred tax assets will not be realized. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment, as well as limitations on use in future periods. Accordingly, management believes that it is more likely than not that the benefit from certain NOL carryforwards from recent acquisitions will not be realized. The Company has a valuation allowance of $34 million on the deferred tax assets related to these NOL carryforwards.

The provisions of the Tax Cuts and Jobs Act of 2017 eliminated the 20-year carryforward period and made it indefinite for federal net operating losses generated in tax years after December 31, 2017. For such amounts generated prior to 2018, the 20-year carryforward period continues to apply.


Components of the net operating loss carryforwards as of December 31, 2022
($ in millions)	20-Year Carryforward Expires in 2025-2037		Indefinite Carryforward Period		Total
US Federal	$	221	$	9	$	230
Foreign	—		219		219
Total	$	221	$	228	$	449


Components of income tax expense
	For the years ended December 31,
($ in millions)	2022		2021		2020
Current	$	(36)	$	841	$	1,480
Deferred	(458)		448		(107)
Total income tax (benefit) expense	$	(494)	$	1,289	$	1,373

The Company paid income taxes of $95 million, $1.05 billion and $1.48 billion in 2022, 2021 and 2020, respectively.

The Company had current income tax receivable of $677 million and $370 million as of December 31, 2022 and 2021, respectively.


Reconciliation of the statutory federal income tax rate to the effective income tax rate
	For the years ended December 31,
($ in millions)	2022				2021				2020
(Loss) income before income taxes	$	(1,858)			$	6,448			$	6,802

Statutory federal income tax rate on income from operations	(390)		21.0	%	1,354		21.0	%	1,428		21.0	%
State income taxes	—		—		13		0.2		31		0.4
Tax credits	(55)		3.0		(42)		(0.6)		(24)		(0.4)
Tax-exempt income	(17)		0.9		(18)		(0.3)		(23)		(0.3)
Share-based payments	(22)		1.2		(18)		(0.3)		(30)		(0.4)



Other	(10)		0.5		—		—		(9)		(0.1)
Effective income tax rate on income from operations	$	(494)	26.6	%	$	1,289	20.0	%	$	1,373	20.2	%