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Income Taxes (Tables) | 12 Months Ended
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Dec. 31, 2020
Income Tax Disclosure [Abstract] |
Income tax provision from continuing operations | The income tax provision from continuing operations consisted of the following amounts:
| Year Ended December 31,
(In millions, except effective income tax rate) | 2020 |  | 2019 |  | 2018
Current |  |  |  |  |
State | $ | 22 |  |  | $ | 2 |  |  | $ | 6 |
Foreign | 4 |  |  | 4 |  |  | — |
Total — current | 26 |  |  | 6 |  |  | 6 |
Deferred |  |  |  |  |
U.S. Federal | 168 |  |  | (3,000) |  |  | (16) |
State | 60 |  |  | (340) |  |  | 16 |
Foreign | (3) |  |  | — |  |  | 1 |
Total — deferred | 225 |  |  | (3,340) |  |  | 1 |
Total income tax expense/(benefit) | $ | 251 |  |  | $ | (3,334) |  |  | $ | 7 |
Effective income tax rate | 33.0 | % |  | (424.2) | % |  | 1.5 | %
Domestic and foreign components of income/(loss) before income tax (benefit)/expense | The following represented the domestic and foreign components of income from continuing operations before income taxes:
| Year Ended December 31,
(In millions) | 2020 |  | 2019 |  | 2018
U.S. | $ | 749 |  |  | $ | 771 |  |  | $ | 468 |
Foreign | 12 |  |  | 15 |  |  | (1) |
Total | $ | 761 |  |  | $ | 786 |  |  | $ | 467 |
Reconciliation of the U.S. federal statutory rate to NRG's effective rate | Reconciliations of the U.S. federal statutory tax rate to NRG's effective tax rate were as follows:
| Year Ended December 31,
(In millions, except effective income tax rate) | 2020 |  | 2019 |  | 2018
Income from continuing operations before income taxes | $ | 761 |  |  | $ | 786 |  |  | $ | 467 |
Tax at federal statutory tax rate | 160 |  |  | 165 |  |  | 98 |
State taxes | 18 |  |  | 13 |  |  | 18 |
Permanent differences | 8 |  |  | (9) |  |  | 7 |
Changes in valuation allowance | 24 |  |  | (3,492) |  |  | (106) |
Deferred impact of state tax rate changes | 2 |  |  | 12 |  |  | — |
Production tax credits ("PTC") | — |  |  | — |  |  | (7) |
Recognition of uncertain tax benefits | 3 |  |  | (10) |  |  | 1 |
Return to provision adjustments | 36 |  |  | — |  |  | — |
Alternative minimum tax ("AMT") refundable credit | — |  |  | — |  |  | (4) |
Other | — |  |  | (13) |  |  | — |
Income tax expense/(benefit) | $ | 251 |  |  | $ | (3,334) |  |  | $ | 7 |
Effective income tax rate | 33.0 | % |  | (424.2) | % |  | 1.5 | %
Company's deferred tax assets and liabilities | The temporary differences, which gave rise to the Company's deferred tax assets and liabilities consisted of the following:
| As of December 31,
(In millions) | 2020 |  | 2019
Deferred tax assets: |  |  |
Deferred compensation, accrued vacation and other reserves | $ | 79 |  |  | $ | 81 |
Difference between book and tax basis of property | 357 |  |  | 548 |
Pension and other postretirement benefits | 86 |  |  | 86 |
Equity compensation | 10 |  |  | 11 |
Bad debt reserve | 16 |  |  | 13 |
Derivatives, net | 11 |  |  | — |
U.S. Federal net operating loss carryforwards | 2,117 |  |  | 2,116 |
Foreign net operating loss carryforwards | 102 |  |  | 105 |
State net operating loss carryforwards | 351 |  |  | 360 |
Federal and state tax credit carryforwards | 384 |  |  | 384 |
Federal benefit on state uncertain tax positions | 4 |  |  | 4 |
Interest disallowance carryforward per §163(j) of the Tax Act | 4 |  |  | 82 |
Inventory obsolescence | 6 |  |  | 7 |
Other | 10 |  |  | 3 |
Total deferred tax assets | 3,537 |  |  | 3,800 |
Deferred tax liabilities: |  |  |
Emissions allowances | 21 |  |  | 19 |
Derivatives, net | — |  |  | 27 |
Goodwill | 29 |  |  | 8 |
Intangibles amortization (excluding goodwill) | 2 |  |  | 15 |
Equity method investments | 156 |  |  | 201 |
Convertible Debt | 16 |  |  | 19 |
Total deferred tax liabilities | 224 |  |  | 289 |
Total deferred tax assets less deferred tax liabilities | 3,313 |  |  | 3,511 |
Valuation allowance | (266) |  |  | (242) |
Total net deferred tax assets, net of valuation allowance | $ | 3,047 |  |  | $ | 3,269 |
Summary of NRG's net deferred tax position | The following table summarizes NRG's net deferred tax position as presented in the consolidated balance sheets:
| As of December 31,
(In millions) | 2020 |  | 2019
Deferred tax asset | $ | 3,066 |  |  | $ | 3,286 |
Deferred tax liability | (19) |  |  | (17) |
Net deferred tax asset | $ | 3,047 |  |  | $ | 3,269 |
Reconciliation of total amounts of uncertain tax benefits | The following table summarizes uncertain tax benefits activity:
| As of December 31,
(In millions) | 2020 |  | 2019
Balance as of January 1 | $ | 15 |  |  | $ | 26 |
Increase due to current year positions | 3 |  |  | 2 |
Settlements, payments and statute closure | (3) |  |  | (13) |
Uncertain tax benefits as of December 31 | $ | 15 |  |  | $ | 15 |

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