The following table presents Devon’s total income tax expense (benefit) and a reconciliation of its effective income tax rate to the U.S. statutory income tax rate.

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Earnings (loss) from continuing operations before income taxes	$	(680	)	$	219		$	(2,787	)	$	(278	)

Current income tax expense (benefit)	$	(3	)	$	3		$	(109	)	$	(1	)
Deferred income tax expense (benefit)		—			65			(311	)		(50	)
Total income tax expense (benefit)	$	(3	)	$	68		$	(420	)	$	(51	)

U.S. statutory income tax rate		21	%		21	%		21	%		21	%
State income taxes		0	%		9	%		1	%		3	%
Change in tax legislation		0	%		0	%		3	%		0	%
Other		(1	%)		1	%		(2	%)		(6	%)
Deferred tax asset valuation allowance		(20	%)		0	%		(8	%)		0	%
Effective income tax rate		0	%		31	%		15	%		18	%

Devon estimates its annual effective income tax rate to record its quarterly provision for income taxes in the various jurisdictions in which it operates. Statutory tax rate changes and other significant or unusual items are recognized as discrete items in the quarter in which they occur.

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) became law on March 27, 2020. The CARES Act allows net operating losses generated in taxable years beginning after December 31, 2017 and before January 1, 2021 to be carried back five years to offset taxable income and generate a refund. Devon intends to carry net operating losses generated in 2019 and 2020 back to 2014 and 2015, respectively. As a result, Devon recorded a $96 million income tax benefit through the first six months of 2020, and expects to record an additional $2 million income tax benefit by the end of the year.

On July 28, 2020, the Department of Treasury issued final regulations regarding the provision of the Tax Cuts and Jobs Act that limits the deduction for business interest expense. Upon preliminary review of the regulations, there are provisions that may have a favorable impact to Devon. Upon completing a full review of the final regulations, Devon expects to record the effects of this tax legislation in the third quarter of 2020.

Throughout 2019, Devon maintained a valuation allowance against certain deferred tax assets, including certain tax credits and state net operating losses. Since then, reduced demand from the COVID-19 pandemic has caused an unprecedented downturn in the commodity price environment. As a result, Devon recorded significant impairments during the first quarter of 2020 and is now in a net deferred tax asset position. Devon reassessed its position and recorded a 100% valuation allowance against all net deferred tax assets as of March 31, 2020 and remains in a full valuation allowance position as of June 30, 2020.

Included in “other” in the table above is the impact of increasing Devon’s unrecognized tax benefits by approximately $34 million during the first quarter of 2020.