INCOME TAXES (Notes)

12 Months Ended

Dec. 31, 2020

The following table sets forth our provision for income taxes for the periods indicated:


	Years Ended December 31,
	2020		2019		2018
	(Thousands of dollars)
Current tax expense (benefit)
Federal	$	980	$	(1,278)	$	260
State	1,797		963		1,633
Total current tax expense (benefit)	2,777		(315)		1,893
Deferred tax expense
Federal	154,068		327,806		319,551
State	32,662		44,923		41,459
Total deferred tax expense	186,730		372,729		361,010
Total provision for income taxes	$	189,507	$	372,414	$	362,903

The following table is a reconciliation of our income tax provision for the periods indicated:


	Years Ended December 31,
	2020			2019			2018
	(Thousands of dollars)
Income before income taxes	$	802,316		$	1,650,991		$	1,517,935
Less: Net income attributable to noncontrolling interests	—			—			3,329
Net income attributable to ONEOK before income taxes	802,316			1,650,991			1,514,606
Federal statutory income tax rate	21.0		%	21.0		%	21.0		%
Provision for federal income taxes	168,486			346,708			318,067

State income taxes, net of federal benefit	13,580			34,545			38,668
Deferred tax rate change, inclusive of valuation allowance	20,879			11,340			5,552
Excess tax benefits from share-based compensation	(7,380)			(20,983)			(4,644)
Other, net	(6,058)			804			5,260
Income tax provision	$	189,507		$	372,414		$	362,903

The following table sets forth the tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and liabilities for the periods indicated:


	December 31, 2020		December 31, 2019
Deferred tax assets	(Thousands of dollars)
Employee benefits and other accrued liabilities	$	96,741	$	99,510
Federal net operating loss	1,473,093		858,030
State net operating loss and benefits	258,929		171,779
Derivative instruments	134,499		83,710

Other	12,894		12,769
Total deferred tax assets	1,976,156		1,225,798
Valuation allowance for state net operating loss and tax credits
Carryforward expected to expire prior to utilization	(121,212)		(94,794)
Net deferred tax assets	1,854,944		1,131,004
Deferred tax liabilities
Excess of tax over book depreciation	87,021		84,631
Investment in partnerships (a)	2,437,620		1,582,436

Total deferred tax liabilities	2,524,641		1,667,067
Net deferred tax assets (liabilities)	$	(669,697)	$	(536,063)

(a) Due primarily to excess of tax over book depreciation.

The majority of our tax benefits relate to federal and state net operating losses and carry forward indefinitely. Due to the Tax Cuts and Jobs Act and the impact of increased expensing for capital investment, we believe that it is more likely than not that the tax benefits of certain carryforwards will not be utilized prior to their expirations; therefore, we recorded a valuation allowance of $20.9 million, $11.3 million and $5.6 million through net income related to these tax benefits in 2020, 2019 and 2018, respectively.