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Income Taxes
 9 Months Ended
Sep. 30, 2022
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Effective Income Tax Rate
The income tax provision consisted of the following:
 Three months ended September 30,Nine months ended September 30,
(In millions, except rates)2022202120222021
Income before income taxes$83 $2,163 $3,055 $3,454 
Income tax expense16 545 739 840 
Effective income tax rate19.3 %25.2 %24.2 %24.3 %
For the three months ended September 30, 2022, the effective tax rate was lower than the statutory rate of 21% primarily due to the benefit resulting from carbon capture tax credits and the reduction in statutory state tax rates. For the nine months ended September 30, 2022, the effective tax rate was higher than the statutory rate of 21% primarily due to state tax expense partially offset by tax benefit resulting from the release of valuation allowance on state net operating losses and carbon capture tax credits. For the three months ended September 30, 2021, the effective tax rate was higher than the statutory rate of 21% primarily due to state tax expense. For the nine months ended September 30, 2021 the effective tax rate was higher than the statutory rate of 21% primarily due to state tax expense partially offset by one-time tax benefits, as a result of the acquisition of Direct Energy, on the revaluation of state deferred tax assets, NOLs and valuation allowance.
The Inflation Reduction Act ("IRA") enacted on August 16, 2022, introduced new provisions including a 15% corporate book minimum tax and a 1% excise tax on net share repurchases with both taxes effective beginning in fiscal year 2023 for NRG. Additionally, the IRA establishes a tax credit associated with existing nuclear facilities which begins in 2024 and terminates at the end of 2031. The tax credit will fully apply when gross revenues are at or below $25 per MWh and phases out completely at $43.75 per MWh. The U.S. Treasury is now taking comments on what should be included in the definition of gross revenues.
Uncertain Tax Benefits
As of September 30, 2022, NRG had a non-current tax liability of $23 million for uncertain tax benefits from positions taken on various federal and state income tax returns inclusive of accrued interest. For the nine months ended September 30, 2022, NRG accrued an immaterial amount of interest relating to the uncertain tax benefits. As of September 30, 2022, NRG had cumulative interest and penalties related to these uncertain tax benefits of $1 million. The Company recognizes interest and penalties related to uncertain tax benefits in income tax expense.
NRG is subject to examination by taxing authorities for income tax returns filed in the U.S. federal jurisdiction and various state and foreign jurisdictions including operations located in Australia and Canada. The Company is no longer subject to U.S. federal income tax examinations for years prior to 2019. With few exceptions, state and local income tax examinations are no longer open for years prior to 2013.