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Income Taxes (Tables) | 12 Months Ended
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Dec. 31, 2021
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) | 2021 |  | 2020 |  | 2019
Current |  |  |  |  |
State | $ | 48 |  |  | $ | 22 |  |  | $ | 2 |
Foreign | 3 |  |  | 4 |  |  | 4 |
Total — current | 51 |  |  | 26 |  |  | 6 |
Deferred |  |  |  |  |
U.S. Federal | 569 |  |  | 168 |  |  | (3,000) |
State | 36 |  |  | 60 |  |  | (340) |
Foreign | 16 |  |  | (3) |  |  | — |
Total — deferred | 621 |  |  | 225 |  |  | (3,340) |
Total income tax expense/(benefit) | $ | 672 |  |  | $ | 251 |  |  | $ | (3,334) |
Effective income tax rate | 23.5 | % |  | 33.0 | % |  | (424.2) | %
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) | 2021 |  | 2020 |  | 2019
U.S. | $ | 2,759 |  |  | $ | 749 |  |  | $ | 771 |
Foreign | 100 |  |  | 12 |  |  | 15 |
Total | $ | 2,859 |  |  | $ | 761 |  |  | $ | 786 |
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) | 2021 |  | 2020 |  | 2019
Income from continuing operations before income taxes | $ | 2,859 |  |  | $ | 761 |  |  | $ | 786 |
Tax at federal statutory tax rate | 600 |  |  | 160 |  |  | 165 |
Foreign rate differential | (3) |  |  | — |  |  | — |
State taxes | 111 |  |  | 18 |  |  | 13 |
Permanent differences | 8 |  |  | 8 |  |  | (9) |
Changes in valuation allowance | (29) |  |  | 24 |  |  | (3,492) |
Deferred impact of state tax rate changes | (10) |  |  | 2 |  |  | 12 |
Recognition of uncertain tax benefits | (10) |  |  | 3 |  |  | (10) |
Return to provision adjustments | 5 |  |  | 36 |  |  | — |
Other | — |  |  | — |  |  | (13) |
Income tax expense/(benefit) | $ | 672 |  |  | $ | 251 |  |  | $ | (3,334) |
Effective income tax rate | 23.5 | % |  | 33.0 | % |  | (424.2) | %
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) | 2021 |  | 2020
Deferred tax assets: |  |  |
Deferred compensation, accrued vacation and other reserves | $ | 114 |  |  | $ | 79 |
Difference between book and tax basis of property | 436 |  |  | 357 |
Pension and other postretirement benefits | 65 |  |  | 86 |
Equity compensation | 7 |  |  | 10 |
Bad debt reserve | 168 |  |  | 16 |
Derivatives, net | — |  |  | 11 |
U.S. Federal net operating loss carryforwards | 1,773 |  |  | 2,117 |
Foreign net operating loss carryforwards | 112 |  |  | 102 |
State net operating loss carryforwards | 328 |  |  | 351 |
Federal and state tax credit carryforwards | 384 |  |  | 384 |
Federal benefit on state uncertain tax positions | 3 |  |  | 4 |
Interest disallowance carryforward per §163(j) of the Tax Act | 6 |  |  | 4 |
Inventory obsolescence | 9 |  |  | 6 |
Other | 15 |  |  | 10 |
Total deferred tax assets | 3,420 |  |  | 3,537 |
Deferred tax liabilities: |  |  |
Emissions allowances | 20 |  |  | 21 |
Derivatives | 591 |  |  | — |
Goodwill | 40 |  |  | 29 |
Intangibles amortization (excluding goodwill) | 363 |  |  | 2 |
Equity method investments | 62 |  |  | 156 |
Convertible Debt | 14 |  |  | 16 |
Total deferred tax liabilities | 1,090 |  |  | 224 |
Total deferred tax assets less deferred tax liabilities | 2,330 |  |  | 3,313 |
Valuation allowance | (248) |  |  | (266) |
Total net deferred tax assets, net of valuation allowance | $ | 2,082 |  |  | $ | 3,047 |
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) | 2021 |  | 2020
Deferred tax asset | $ | 2,155 |  |  | $ | 3,066 |
Deferred tax liability | (73) |  |  | (19) |
Net deferred tax asset | $ | 2,082 |  |  | $ | 3,047 |
Reconciliation of total amounts of uncertain tax benefits | The following table summarizes uncertain tax benefits activity:
| As of December 31,
(In millions) | 2021 |  | 2020
Balance as of January 1 | $ | 15 |  |  | $ | 15 |
Increase due to current year positions | 4 |  |  | 3 |
Increase due to acquired balance from Direct Energy | 9 |  |  | — |
Settlements, payments and statute closure | (15) |  |  | (3) |
Uncertain tax benefits as of December 31 | $ | 13 |  |  | $ | 15 |

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