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INCOME TAXES
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
PROVISION FOR INCOME TAXES INCOME TAXES
Components of earnings before income taxes and the provision for U.S. and other income taxes from operations follow:
 For years ended December 31,
(Dollars in millions)202320222021
Earnings before income taxes    
United States$357 $205 $645 
Outside the United States730 772 437 
Total$1,087 $977 $1,082 
Provision for income taxes 
United States Federal 
Current$133 $179 $114 
Deferred(39)(76)18 
Outside the United States
Current153 105 115 
Deferred(35)(10)(42)
State and other
Current7 33 24 
Deferred(28)(50)(14)
Total$191 $181 $215 
The following represents the deferred tax (benefit) charge recorded as a component of "Accumulated other comprehensive income (loss)" ("AOCI") in the Consolidated Statements of Financial Position:
 For years ended December 31,
(Dollars in millions)202320222021
Cumulative translation adjustment$11 $— $— 
Defined benefit pension and other postretirement benefit plans(6)(7)(10)
Derivatives and hedging(9)(1)21 
Total$(4)$(8)$11 

Total income tax expense (benefit) included in the consolidated financial statements was composed of the following:
 For years ended December 31,
(Dollars in millions)202320222021
Earnings before income taxes$191 $181 $215 
Other comprehensive income(4)(8)11 
Total$187 $173 $226 

Differences between the provision for income taxes and income taxes computed using the U.S. Federal statutory income tax rate follow:
 For years ended December 31,
 (Dollars in millions)202320222021
Amount computed using the statutory rate$228$205$225
State income taxes, net(26)(27)(4)
Foreign rate variance(78)(16)(28)
Change in reserves for tax contingencies10527(39)
General business credits(81)(44)(21)
U.S. tax on foreign earnings, net of credits22(17)2
Divestitures143789
Tax law changes and tax loss from outside-U.S. entity reorganizations——(15)
Other7166
Provision for income taxes$191$181$215
Effective income tax rate18 %19 %20 %

The 2023 provision for income taxes includes an increase related to uncertain tax positions, a decrease related to general business credits, and a decrease related to the foreign rate variance due to the Company's mix of earnings.

The 2022 provision for income taxes includes decreases related to general business credits and the release of a state valuation allowance, offset by the impacts of the business divestitures.

The 2021 provision for income taxes includes decreases related to uncertain tax positions, the foreign rate variance due to the Company's mix of earnings, and general business credits, offset by the impacts of the divestiture of rubber additives.

Income tax incentives, in the form of tax holidays, have been granted to the Company in certain jurisdictions to attract investment and encourage industrial development. The expiration of these tax holidays varies by country. The tax holidays are conditional on the Company meeting certain requirements, including employment and investment thresholds; determination of compliance with these conditions may be subject to challenge by tax authorities in those jurisdictions. No individual tax holiday had a material impact to the Company's earnings in 2023, 2022, or 2021.
The significant components of deferred tax assets and liabilities follow:
 December 31,
(Dollars in millions)20232022
Deferred tax assets 
Post-employment obligations$158 $150 
Net operating loss carryforwards690 645 
Tax credit carryforwards268 236 
Environmental contingencies68 64 
Capitalized research and development expenses322 139 
Other264 239 
Total deferred tax assets1,770 1,473 
Less: Valuation allowance183 258 
Deferred tax assets less valuation allowance$1,587 $1,215 
Deferred tax liabilities 
Property, plant, and equipment$(952)$(849)
Intangible assets(270)(272)
Investments(516)(441)
Deferred gain
(160)(58)
Other(134)(143)
Total deferred tax liabilities$(2,032)$(1,763)
Net deferred tax liabilities$(445)$(548)
As recorded in the Consolidated Statements of Financial Position: 
Other noncurrent assets$156 $123 
Deferred income tax liabilities(601)(671)
Net deferred tax liabilities$(445)$(548)

All foreign earnings, with the exception of short-term liquid assets on certain foreign subsidiaries, including basis differences, continue to be considered indefinitely reinvested. As of December 31, 2023, unremitted earnings of subsidiaries outside the U.S. totaled approximately $3.5 billion of which a substantial portion has already been subject to U.S. tax. The Company has not determined the deferred tax liability associated with these unremitted earnings and basis differences, as such determination is not practicable.

At December 31, 2023, foreign net operating loss carryforwards totaled $2.5 billion. Of this amount, $900 million will expire in 1 to 20 years and $1.6 billion of the carryforwards have no expiration date. A valuation allowance of approximately $59 million has been provided against such net operating loss carryforwards and other foreign deferred income tax balances.

At December 31, 2023, there were no federal net operating loss carryforwards available to offset future taxable income. At December 31, 2023, foreign tax credit carryforwards of approximately $89 million were available to reduce possible future U.S. income taxes, which expire from 2024 to 2033. As a result of the 2017 Tax Cuts and Jobs Act ("Tax Reform Act"), the Company may no longer be able to utilize certain U.S. foreign tax credit carryforwards. A valuation allowance of $79 million has been established on a portion of deferred tax assets as of December 31, 2023.

A partial valuation allowance of $42 million has been established for the Solutia, Inc. ("Solutia") state net operating loss carryforwards. The valuation allowance will be retained until there is sufficient positive evidence to conclude that it is more likely than not that the deferred tax assets will be realized, or the related statute expires.

The Tax Reform Act eliminated the option to deduct research and development ("R&D") expenses in the period incurred and requires R&D expenses to be capitalized and amortized beginning in 2022.
Amounts due to and from tax authorities as recorded in the Consolidated Statements of Financial Position:
 December 31,
(Dollars in millions)20232022
Miscellaneous receivables$62 $35 
Payables and other current liabilities$133 $95 
Other long-term liabilities287 174 
Total income taxes payable$420 $269 

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:
(Dollars in millions)202320222021
Balance at January 1$235 $200 $257 
Adjustments based on tax positions related to current year33 11 6 
Adjustments based on tax positions related to prior years68 24 2 
Lapse of statute of limitations(9)— (45)
Settlements(7)— (20)
Balance at December 31 (1)
$320 $235 $200 
(1)Approximately $313 million of the unrecognized tax benefits as of December 31, 2023, would, if recognized, impact the Company's effective tax rate.

A reconciliation of the beginning and ending amounts of accrued interest related to unrecognized tax positions is as follows:
(Dollars in millions)202320222021
Balance at January 1$22 $13 $13 
Expense for interest, net of tax17 9 9 
Income for interest, net of tax— — (9)
Balance at December 31$39 $22 $13 

Accrued penalties related to unrecognized tax positions were immaterial as of December 31, 2023, 2022, and 2021.

Eastman files federal income tax returns in the U.S. and income tax returns in various state and foreign jurisdictions. The Company is no longer subject to U.S. federal income tax examinations by tax authorities for years before 2017. With few exceptions, Eastman is no longer subject to foreign, state, and local income tax examinations by tax authorities for years before 2015. Solutia and related subsidiaries are no longer subject to state and local income tax examinations for years before 2002.

It is reasonably possible that, as a result of the resolution of federal, state, and foreign examinations and appeals, and the expiration of various statutes of limitation, unrecognized tax benefits could decrease within the next twelve months by up to $45 million.