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Income Taxes | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The components of income tax provision attributable to continuing operations were as follows:
| Years Ended December 31,
2023 |  | 2022 |  | 2021
(in millions)
Current income tax |  |  |  |  |
Federal | $ | 518 |  |  | $ | 509 |  |  | $ | 551 |
State and local | 124 |  |  | 93 |  |  | 79 |
Foreign | 18 |  |  | 25 |  |  | 47 |
Total current income tax | 660 |  |  | 627 |  |  | 677 |
Deferred income tax |  |  |  |  |
Federal | 45 |  |  | 155 |  |  | 113 |
State and local | (14) |  |  | 6 |  |  | — |
Foreign | (13) |  |  | (6) |  |  | (22) |
Total deferred income tax | 18 |  |  | 155 |  |  | 91 |
Total income tax provision | $ | 678 |  |  | $ | 782 |  |  | $ | 768 |
The geographic sources of pretax income from continuing operations were as follows:
| Years Ended December 31,
| 2023 |  | 2022 |  | 2021
| (in millions)
United States | $ | 3,199 |  |  | $ | 3,824 |  |  | $ | 3,961 |
Foreign | 35 |  |  | 107 |  |  | 224 |
Total | $ | 3,234 |  |  | $ | 3,931 |  |  | $ | 4,185 |
The principal reasons that the aggregate income tax provision attributable to continuing operations is different from that computed by using the U.S. statutory rate of 21% were as follows:
| Years Ended December 31,
2023 |  | 2022 |  | 2021
Tax at U.S. statutory rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
Changes in taxes resulting from: |  |  |  |  |
State taxes, net of federal benefit | 2.7 |  |  | 2.0 |  |  | 1.5 |
Non-deductible expenses | 1.1 |  |  | 0.5 |  |  | 0.4 |
Incentive compensation | (1.5) |  |  | (1.0) |  |  | (1.3) |
Low income housing tax credits | (1.0) |  |  | (1.1) |  |  | (1.6) |
Other, net | (1.3) |  |  | (1.5) |  |  | (1.7) |
Income tax provision | 21.0 | % |  | 19.9 | % |  | 18.3 | %
The increase in the Company’s effective tax rate for the year ended December 31, 2023 compared to 2022 is primarily the result of an increase in state taxes, net of federal benefit, partially offset by incentive compensation and various other adjustments. The increase in the Company’s effective tax rate for the year ended December 31, 2022 compared to 2021 is primarily the result of a decrease in low income housing tax credits and an increase in state taxes, net of federal benefit, and various other adjustments. Deferred income tax assets and liabilities result from temporary differences between the assets and liabilities measured for GAAP reporting versus income tax return purposes. Deferred income tax assets and liabilities are measured at the statutory rate of 21% as of both December 31, 2023 and 2022. The significant components of the Company’s deferred income tax assets and liabilities, which are included net within Other assets or Other liabilities, were as follows:
| December 31,
2023 |  | 2022 (1)
(in millions)
Deferred income tax assets
Insurance and annuity benefits including corresponding hedges | $ | 1,244 |  |  | $ | 1,404 |
Deferred compensation including corresponding hedges | 545 |  |  | 480 |
Investments including net unrealized on Available-for-Sale securities | 335 |  |  | 512 |
Net operating loss | 74 |  |  | 63 |
Other | 127 |  |  | 134 |
Gross deferred income tax assets | 2,325 |  |  | 2,593 |
Less: valuation allowance | 65 |  |  | 65 |
Total deferred income tax assets | 2,260 |  |  | 2,528 |
Deferred income tax liabilities |  |  |
Deferred acquisition costs | 390 |  |  | 420 |
Goodwill and intangibles | 313 |  |  | 301 |
Other | 131 |  |  | 158 |
Gross deferred income tax liabilities | 834 |  |  | 879 |
Net deferred income tax assets | $ | 1,426 |  |  | $ | 1,649 |
(1) Prior period amounts have been reclassified to conform to current year presentation and primarily relate to derivative activity being presented with the liabilities they are hedging and remaining investments being presented together inclusive of net unrealized on Available-for-Sale securities. Included in the Company’s deferred income tax assets are tax benefits related to state net operating losses of $30 million, net of federal benefit, which will expire beginning December 31, 2024 and foreign net operating losses of $44 million, which do not expire. Based on analysis of the Company’s tax position as of December 31, 2023, management believes it is more likely than not that the Company will not realize certain state net operating losses of $29 million and state deferred tax assets of $2 million, net of federal benefit, and foreign net operating losses of $34 million; therefore, a valuation allowance of $65 million has been established. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits was as follows:
| 2023 |  | 2022 |  | 2021
| (in millions)
Balance at January 1 | $ | 138 |  |  | $ | 125 |  |  | $ | 110 |
Additions for tax positions related to the current year | 26 |  |  | 12 |  |  | 21 |
Reductions for tax positions related to the current year | (3) |  |  | (1) |  |  | (1) |
Additions for tax positions of prior years | 80 |  |  | 5 |  |  | 5 |
Reductions for tax positions of prior years | (85) |  |  | (1) |  |  | (8) |
Reductions due to lapse of statutes of limitations | (5) |  |  | — |  |  | (1) |
Audit settlements | (1) |  |  | (2) |  |  | (1) |
Balance at December 31 | $ | 150 |  |  | $ | 138 |  |  | $ | 125 |
If recognized, approximately $120 million, $106 million and $95 million, net of federal tax benefits, of unrecognized tax benefits as of December 31, 2023, 2022 and 2021, respectively, would affect the effective tax rate. It is reasonably possible that the total amount of unrecognized tax benefits will change in the next 12 months. The Company estimates that the total amount of gross unrecognized tax benefits may decrease by approximately $25 million in the next 12 months primarily due to expected exam closures and state statutes of limitations expirations. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of the income tax provision. The Company recognized a net increase of $12 million, $4 million and nil in interest and penalties for the years ended December 31, 2023, 2022 and 2021, respectively. As of December 31, 2023 and 2022, the Company had a payable of $26 million and $14 million, respectively, related to accrued interest and penalties. The Company or one or more of its subsidiaries files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. As of December 31, 2023, the federal statutes of limitations are closed on years through 2018. A previously open item for 2014 and 2015 was resolved in the second quarter of 2023. Also in the second quarter of 2023, the Internal Revenue Service (“IRS”) audit for tax years 2016 through 2018 was finalized. The IRS is currently auditing the Company’s U.S. income tax returns for 2019 and 2020. The Company’s state income tax returns are currently under examination by various jurisdictions for years ranging from 2017 through 2021. The Company is an applicable corporation required to compute CAMT; however, based on current estimates the Company does not expect to be liable for the CAMT in 2023 and therefore a liability has not been recorded.

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