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Income Taxes | 6 Months Ended
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Jun. 30, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The Company makes an estimate of its anticipated effective tax rate for the year as of the end of each quarterly period within its fiscal year. In interim periods, income tax expense is calculated by applying the anticipated annual effective tax rate to year-to-date earnings before income taxes. Certain unusual or infrequently occurring items are excluded from the estimated annual rate calculation. Such items include regulatory disallowances and excess tax benefits or deficiencies related to stock awards. At June 30, 2024, PNMR, PNM, and TNMP estimated their effective income tax rates for the year ended December 31, 2024 would be 15.29%, 14.31%, and 20.71%. The primary difference between the statutory income tax rates and the effective tax rates is the effect of the reduction in income tax expense resulting from the amortization of excess deferred federal income taxes. During the six months ended June 30, 2024, income tax expense calculated by applying the expected annual effective income tax rate to earnings before income taxes was further decreased by discrete items, including $1.1 million for the tax effects of regulatory disallowances at PNM and $19.5 million from the sale of NMRD at PNMR. Excess tax shortfalls related to stock awards increased tax expense by less than $0.1 million for PNMR, of which less than $0.1 million was allocated to PNM and less than $0.1 million was allocated to TNMP. Beginning February 2018, PNM’s NM 2016 Rate Case reflected the reduction in the federal corporate income tax rate resulting from enactment of legislation commonly known as the Tax Cuts and Jobs Act (the “Tax Act”), including amortization of excess deferred federal income taxes. In accordance with the order in that case, PNM is returning the protected portion of excess deferred federal income taxes to customers over the average remaining life of plant in service as of December 31, 2017, and had been returning the unprotected portion of excess deferred federal income taxes to customers over a period of approximately twenty-three years. Pursuant to the final order in the PNM 2024 Rate Change, the remaining balance of $62.7 million of unprotected excess deferred income taxes is being returned over a five-year period. The approved settlement in the TNMP 2018 Rate Case includes a reduction in customer rates to reflect the impacts of the Tax Act beginning on January 1, 2019. PNMR, PNM, and TNMP will amortize federal excess deferred income taxes of $23.3 million, $20.7 million, and $2.6 million in 2024. See additional discussion of the impacts of the Tax Act in Note 18 of the Notes to Consolidated Financial Statements in the 2023 Annual Reports on Form 10-K.

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