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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income tax provision from continuing operations

The income tax provision consisted of the following amounts:

			Year Ended December 31,
(In millions, except effective income tax rate)			2022						2021						2020
Current
U.S. Federal			$	3					$	—					$	—
State			65						48						22
Foreign			3						3						4
Total — current			71						51						26
Deferred
U.S. Federal			258						569						168
State			59						36						60
Foreign			54						16						(3)
Total — deferred			371						621						225
Total income tax expense			$	442					$	672					$	251
Effective income tax rate			26.6		%				23.5		%				33.0		%

Domestic and foreign components of income/(loss) before income tax (benefit)/expense

The following represented the domestic and foreign components of income before income taxes:

			Year Ended December 31,
(In millions)			2022						2021						2020
U.S.			$	1,436					$	2,759					$	749
Foreign			227						100						12
Total			$	1,663					$	2,859					$	761

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)			2022						2021						2020
Income before income taxes			$	1,663					$	2,859					$	761
Tax at federal statutory tax rate			349						600						160
Foreign rate differential			7						(3)						—
State taxes			69						111						18
Permanent differences			17						8						8
Changes in valuation allowance			(3)						(29)						24
Deferred impact of state tax rate changes			14						(10)						2
Recognition of uncertain tax benefits			8						(10)						3
Carbon capture tax credits			(19)						—						—
Return to provision adjustments			—						5						36
Income tax expense			$	442					$	672					$	251
Effective income tax rate			26.6		%				23.5		%				33.0		%

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)			2022						2021
Deferred tax assets:
Deferred compensation, accrued vacation and other reserves			$	93					$	114
Difference between book and tax basis of property			399						436
Pension and other postretirement benefits			62						65
Equity compensation			8						7
Allowance for credit losses			33						168
U.S. Federal net operating loss carryforwards			1,717						1,773
Foreign net operating loss carryforwards			104						112
State net operating loss carryforwards			315						328
Federal and state tax credit carryforwards			393						384
Federal benefit on state uncertain tax positions			5						3
Interest disallowance carryforward per §163(j) of the Tax Act			65						6
Inventory obsolescence			10						9
U.S. capital loss			15						—
Other			22						15
Total deferred tax assets			3,241						3,420
Deferred tax liabilities:
Emissions allowances			19						20
Derivatives			874						591
Goodwill			26						40
Intangibles amortization (excluding goodwill)			269						363
Equity method investments			82						62
Convertible Debt			—						14
Total deferred tax liabilities			1,270						1,090
Total deferred tax assets less deferred tax liabilities			1,971						2,330
Valuation allowance			(224)						(248)
Total net deferred tax assets, net of valuation allowance			$	1,747					$	2,082

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)			2022						2021
Deferred tax asset			$	1,881					$	2,155
Deferred tax liability			(134)						(73)
Net deferred tax asset			$	1,747					$	2,082

Reconciliation of total amounts of uncertain tax benefits

The following table summarizes uncertain tax benefits activity:

			As of December 31,
(In millions)			2022						2021
Balance as of January 1			$	13					$	15
Increase due to current year positions			9						4
Increase due to acquired balance from Direct Energy			—						9
Settlements, payments and statute closure			—						(15)
Uncertain tax benefits as of December 31			$	22					$	13

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