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Income Taxes
 9 Months Ended
Sep. 30, 2023
Income Tax Disclosure [Abstract]  
Income Taxes

7. Income Taxes

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

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Earnings before income taxes

 

$

1,072

 

 

$

2,465

 

 

$

3,193

 

 

$

6,222

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current income tax expense

 

$

139

 

 

$

120

 

 

$

360

 

 

$

475

 

Deferred income tax expense

 

 

13

 

 

 

445

 

 

 

212

 

 

 

914

 

Total income tax expense

 

$

152

 

 

$

565

 

 

$

572

 

 

$

1,389

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. statutory income tax rate

 

 

21

%

 

 

21

%

 

 

21

%

 

 

21

%

State income taxes

 

 

1

%

 

 

2

%

 

 

1

%

 

 

1

%

Income tax credits

 

 

(8

%)

 

 

0

%

 

 

(4

%)

 

 

0

%

Effective income tax rate

 

 

14

%

 

 

23

%

 

 

18

%

 

 

22

%

 

On August 16, 2022, the IRA was signed into law and included various income tax related provisions with effective dates generally beginning in 2023. Among the enacted provisions are a 15% CAMT on AFSI and several new and expanded clean energy credits and incentives. Devon believes it is subject to the CAMT as Devon has an average annual AFSI that exceeds $1 billion for the three-year period ended December 31, 2022. Devon continues to assess the potential incremental cash tax that could be incurred, depending on actual operating results, as well as ongoing U.S. Treasury guidance.

 

In the third quarter and the nine months ended 2023, Devon recognized income tax credits associated with its qualified research activities. This includes actual credits generated in the 2018-2022 tax years as well as estimated credits for the 2023 tax year.