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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | 6. Income Taxes Income Tax Expense The following table presents Devon’s income tax components.
|  | Year Ended December 31, |
|  | 2024 |  |  | 2023 |  |  | 2022 |
Current income tax expense (benefit): |  |  |  |  |  |  |  |  |
U.S. federal |  | $ | 427 |  |  | $ | 441 |  |  | $ | 501 |
Various states |  |  | 32 |  |  |  | 27 |  |  |  | 65 |
Canada |  |  | — |  |  |  | (3 | ) |  |  | (7 | )
Total current income tax expense |  |  | 459 |  |  |  | 465 |  |  |  | 559 |
Deferred income tax expense: |  |  |  |  |  |  |  |  |
U.S. federal |  |  | 267 |  |  |  | 365 |  |  |  | 1,090 |
Various states |  |  | 44 |  |  |  | 11 |  |  |  | 82 |
Canada |  |  | — |  |  |  | — |  |  |  | 7 |
Total deferred income tax expense |  |  | 311 |  |  |  | 376 |  |  |  | 1,179 |
Total income tax expense |  | $ | 770 |  |  | $ | 841 |  |  | $ | 1,738 |
Total income tax expense differed from the amounts computed by applying the U.S. federal income tax rate to earnings before income taxes as a result of the following:
|  | Year Ended December 31, |
|  | 2024 |  |  | 2023 |  |  | 2022 |
Earnings before income taxes |  | $ | 3,712 |  |  | $ | 4,623 |  |  | $ | 7,775 |
U.S. statutory income tax rate |  |  | 21 | % |  |  | 21 | % |  |  | 21 | %
State income taxes |  |  | 2 | % |  |  | 1 | % |  |  | 1 | %
Income tax credits |  |  | (2 | %) |  |  | (3 | %) |  |  | — |
Other |  |  | — |  |  |  | (1 | %) |  |  | — |
Effective income tax rate |  |  | 21 | % |  |  | 18 | % |  |  | 22 | %
In 2024 and 2023, Devon recognized income tax credits associated with its qualified research activities. Deferred Tax Assets and Liabilities The following table presents the tax effects of temporary differences that gave rise to Devon’s deferred tax assets and liabilities.
|  | December 31, |
|  | 2024 |  |  | 2023 |
Deferred tax assets: |  |  |  |  |  |
Capital loss carryforwards |  | $ | 497 |  |  | $ | 542 |
Net operating loss carryforwards |  |  | 428 |  |  |  | 447 |
Accrued liabilities |  |  | 191 |  |  |  | 194 |
Asset retirement obligation |  |  | 181 |  |  |  | 148 |
Other, including tax credits |  |  | 28 |  |  |  | 25 |
Total deferred tax assets before valuation allowance |  |  | 1,325 |  |  |  | 1,356 |
Less: valuation allowance |  |  | (794 | ) |  |  | (826 | )
Net deferred tax assets |  |  | 531 |  |  |  | 530 |
Deferred tax liabilities: |  |  |  |  |  |
Property and equipment |  |  | (2,669 | ) |  |  | (2,304 | )
Fair value of derivative financial instruments |  |  | (6 | ) |  |  | (50 | )
Other |  |  | (4 | ) |  |  | (14 | )
Total deferred tax liabilities |  |  | (2,679 | ) |  |  | (2,368 | )
Net deferred tax liability |  | $ | (2,148 | ) |  | $ | (1,838 | )
At December 31, 2024, Devon has recognized $428 million of deferred tax assets related to various net operating loss carryforwards available to offset future taxable income. Devon has $107 million of U.S. federal net operating loss carryforwards, of which $60 million expires between 2035 and 2036, and $47 million does not expire. Devon has $8 million of Canadian net operating loss carryforwards, all of which are covered by a valuation allowance. Devon also has $313 million of state net operating loss carryforwards, with $149 million expiring between 2025 and 2040, $164 million with no expiration, and $281 million of which are covered by a valuation allowance. Devon’s remaining $107 million U.S. federal net operating losses were acquired through the merger with WPX. These net operating losses are subject to limitation pursuant to Section 382 of the Internal Revenue Code of 1986, which relates to limitations upon the 50% or greater change of ownership of an entity during any three-year period. The Company anticipates utilizing these net operating losses prior to their expiration. Devon's remaining Canadian deferred tax assets of $505 million, primarily made up of $489 million of capital losses, are fully covered by a valuation allowance. Unrecognized Tax Benefits The following table presents changes in Devon’s unrecognized tax benefits.
|  | December 31, |
|  | 2024 |  |  | 2023 |
|  | (Millions) |
Balance at beginning of year |  | $ | 83 |  |  | $ | 73 |
Tax positions taken in prior periods |  |  | 22 |  |  |  | 10 |
Balance at end of year |  | $ | 105 |  |  | $ | 83 |
Devon's unrecognized tax benefit balance at December 31, 2024 and 2023 included $12 million and $4 million, respectively, of interest. At December 31, 2024 and 2023, there were $105 million and $83 million, respectively, of current unrecognized tax benefits that if recognized would affect the annual effective tax rate. Included below is a summary of the tax years, by jurisdiction, that remain subject to examination by taxing authorities.
Jurisdiction |  | Tax Years Open
U.S. federal |  | 2018-2024
Various U.S. states |  | 2020-2024
Canada |  | 2006-2024
Certain statute of limitation expirations are scheduled to occur in the next twelve months. Devon is currently in various stages of the audit and administrative review process for certain open tax years.

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