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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The income tax provision consisted of the following amounts:
 Year Ended December 31,
(In millions, except effective income tax rate)202320222021
Current   
U.S. Federal$26 $3 $— 
State84 65 48 
Foreign(12)3 3 
Total — current98 71 51 
Deferred 
U.S. Federal50 258 569 
State(61)59 36 
Foreign(98)54 16 
Total — deferred(109)371 621 
Total income tax (benefit)/expense$(11)$442 $672 
Effective income tax rate5.2 %26.6 %23.5 %
The IRA enacted on August 16, 2022, introduced new provisions including a 15% corporate alternative minimum tax and a 1% excise tax on net share repurchases with both taxes effective beginning in fiscal year 2023 for NRG. There is no impact on the Company's provision for income taxes from the CAMT for the year ended December 31, 2023. The Company will reevaluate the impact of the corporate alternative minimum tax upon the potential release of guidance by the U.S. Treasury and the IRS regarding the treatment of unrealized gains and losses on derivative instruments.
The following represented the domestic and foreign components of income before income taxes:
 Year Ended December 31,
(In millions)202320222021
U.S. $261 $1,436 $2,759 
Foreign(474)227 100 
Total$(213)$1,663 $2,859 
Reconciliations of the U.S. federal statutory tax rate to NRG's effective tax rate were as follows:
 Year Ended December 31,
(In millions, except effective income tax rate)202320222021
(Loss)/Income before income taxes$(213)$1,663 $2,859 
Tax at federal statutory tax rate(45)349 600 
State taxes(22)69 111 
Foreign rate differential (10)7 (3)
Changes in state valuation allowances42 (3)(29)
Permanent differences31 17 8 
Recognition of uncertain tax benefits12 8 (10)
Deferred impact of state tax rate changes3 14 (10)
Foreign tax refunds(17)— — 
Return to provision adjustments(5)— 5 
Carbon capture tax credits— (19)— 
Income tax (benefit)/expense$(11)$442 $672 
Effective income tax rate5.2 %26.6 %23.5 %
For the year ended December 31, 2023, NRG's effective income tax rate was lower than the federal statutory tax rate of 21%, primarily due to permanent differences and changes in state valuation allowances.
For the year ended December 31, 2022, NRG's effective income tax rate was higher than the federal statutory tax rate of 21% primarily due to state tax expense partially offset by the recognition of carbon capture tax credits.
For the year ended December 31, 2021, NRG's effective income tax rate was higher than the federal statutory tax rate of 21% primarily due to state tax expense partially offset by tax benefits from the revaluation of state deferred tax assets, valuation allowance, and settlements of uncertain tax positions.
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)20232022
Deferred tax assets:  
U.S. Federal net operating loss carryforwards$1,762 $1,717 
State net operating loss carryforwards367 315 
Foreign net operating loss carryforwards110 104 
Deferred revenues347 — 
Difference between book and tax basis of property353 399 
Federal and state tax credit carryforwards317 393 
Deferred compensation, accrued vacation and other reserves141 93 
Interest disallowance carryforward per §163(j) of the Tax Act132 65 
Pension and other postretirement benefits48 62 
Allowance for credit losses35 33 
Equity compensation24 8 
Federal benefit on state uncertain tax positions13 5 
Inventory obsolescence11 10 
U.S. capital loss1 15 
Other33 22 
Total deferred tax assets3,694 3,241 
Deferred tax liabilities:
Intangibles amortization (excluding goodwill)726 269 
Derivatives156 874 
Capitalized contract costs131 — 
Equity method investments93 82 
Goodwill40 26 
Debt discount amortization26 — 
Emissions allowances18 19 
Total deferred tax liabilities1,190 1,270 
Total deferred tax assets less deferred tax liabilities 2,504 1,971 
Valuation allowance(275)(224)
Total net deferred tax assets, net of valuation allowance$2,229 $1,747 
The following table summarizes NRG's net deferred tax position as presented in the consolidated balance sheets:
 As of December 31,
(In millions)20232022
Deferred tax asset $2,251 $1,881 
Deferred tax liability(22)(134)
Net deferred tax asset$2,229 $1,747 
The primary drivers for the increase in the net deferred tax asset from $1.7 billion as of December 31, 2022 to $2.2 billion as of December 31, 2023 is due to unrealized mark-to-market book losses and deferred revenues, partially offset by capitalized contract costs and a step-up in basis of book intangibles associated with the acquisition of Vivint Smart Home.
Deferred tax assets and valuation allowance
Net deferred tax balance — As of December 31, 2023 and 2022, NRG recorded a net deferred tax asset, excluding valuation allowance, of $2.5 billion and $2.0 billion, respectively. The Company believes certain state net operating losses may not be realizable under the more-likely-than-not measurement and as such, a valuation allowance was recorded as of December 31, 2023 as discussed below.
NOL carryforwards — As of December 31, 2023, the Company had tax-effected cumulative U.S. NOLs consisting of carryforwards for federal and state income tax purposes of $1.8 billion and $367 million, respectively. In addition, NRG has tax-effected cumulative foreign NOL carryforwards of $110 million. The majority of NRG's NOL carryforwards have no expiration date.
 Valuation allowance — As of December 31, 2023, the Company's tax-effected valuation allowance was $275 million, consisting of state NOL carryforwards and foreign NOL carryforwards. The valuation allowance was recorded based on the assessment of cumulative and forecasted pre-tax book earnings and the future reversal of existing taxable temporary differences.
Taxes Receivable and Payable
As of December 31, 2023, NRG recorded a current federal payable of $20 million, a current net state payable of $3 million and a current net foreign receivable of $7 million.
Uncertain tax benefits
NRG has identified uncertain tax benefits with after-tax value of $73 million and $22 million as of December 31, 2023 and 2022, for which NRG has recorded a non-current tax liability of $76 million and $24 million, respectively. The Company recognizes interest and penalties related to uncertain tax benefits in income tax expense. The Company recognized $1 million of interest expense for the year ended December 31, 2023, $1 million for the year ended 2022 and an immaterial amount for the year ended 2021. As of December 31, 2023 and 2022, NRG had cumulative interest and penalties related to these uncertain tax benefits of $3 million and $2 million, respectively.
Tax jurisdictions — 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 2020. With few exceptions, state and Canadian income tax examinations are no longer open for years before 2015.
The following table summarizes uncertain tax benefits activity:
 As of December 31,
(In millions)20232022
Balance as of January 1$22 $13 
Increase due to current year positions28 9 
Increase due to acquired balance from Vivint Smart Home23 — 
Uncertain tax benefits as of December 31$73 $22