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INCOME TAXES
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
Provision for Income Taxes
We are subject to tax in U.S. federal and various state and local jurisdictions, as well as Canada and India. We are open to federal and significant state income tax examinations for tax year 2019 and subsequent years. The provision for income taxes consists of the following:
Year Ended December 31,
(in millions)202420232022
Current:
Federal
$50 $96 $112 
State
4 24 36 
   Foreign— 2 — 
 Total Current54 122 148 
Deferred:
Federal
(2)1 (17)
State
1 3 (6)
Foreign— — 2 
Total Deferred(1)4 (21)
Total$53 $126 $127 
The U.S. federal statutory income tax rate reconciled to our effective tax rate is as follows:
Year Ended December 31,
202420232022
(in millions, except percent)Pre-Tax IncomeTax Expense/(Benefit)Percent of Pre-Tax Income (Loss)Pre-Tax IncomeTax Expense/(Benefit)Percent of Pre-Tax Income (Loss)Pre-Tax IncomeTax Expense/(Benefit)Percent of Pre-Tax Income (Loss)
$226 $501 $482 
U.S. federal statutory tax rate$48 21 %$105 21 %$101 21 %
State income taxes, net of federal benefit14 6 34 7 34 7 
Tax rate change— — 1 — — — 
Nondeductible meals, entertainment and penalties2 1 2 — 3 1 
Stock based compensation3 2 (2)— 3 1 
Uncertain tax positions1 — — — — — 
Tax credits(7)(3)(6)(1)(8)(2)
State and tax return to provision adjustments(8)(4)(11)(2)(9)(2)
Other— — 3 — 3 — 
Total$53 23 %$126 25 %$127 26 %
Our effective income tax rate decreased by 2% to 23% in 2024 from 25% in 2023. The decrease in the rate was primarily attributable to an increase in tax benefits related to excludable income for state tax purposes and tax credits, offset by a decrease in tax benefits for stock based compensation.
Global tax developments from the Organization for Economic Cooperation and Development proposes implementation of a global minimum tax under the Pillar Two model rules. Management has determined this development applicable to multinational businesses does not have a material impact to our business, cash flows, or financial results.
Deferred Income Taxes
Significant components of our deferred tax assets and liabilities are as follows:
Year Ended December 31,
(in millions)20242023
Deferred tax assets:
Net operating losses (federal and state)$5 $6 
Accrued expenses15 18 
Accrued workers' compensation costs9 9 
Recovery credit— 2 
Operating lease liabilities9 11 
Stock based compensation2 2 
Tax benefits relating to uncertain positions1 1 
Tax credits (federal, state and foreign)8 7 
Section 174 Capitalized R&D18 21 
Other3 2
Total70 79 
Valuation allowance(8)(8)
Total deferred tax assets62 71 
Deferred tax liabilities:
Depreciation and amortization(35)(48)
Prepaid commission expenses(28)(26)
Operating lease right-of-use assets(5)(5)
Total deferred tax liabilities(68)(79)
Net deferred tax liabilities$(6)$(8)
As of December 31, 2024 and 2023, we have federal net operating loss of $1 million which can be carried forward indefinitely. We have capital loss carryforwards of $3 million which will expire in 2027. As of December 31, 2024 and 2023, we have various gross state net operating loss carryforwards of $82 million and $91 million, respectively, most of which, if unused, will expire in years 2025 through 2044. As of December 31, 2024 and 2023, we have state tax credit carryforwards (net of federal benefit) of $5 million that will begin expiring in 2026. In addition, Canada tax credit carryforwards of $2 million will begin expiring in 2037.
Valuation Allowance
We have recorded a valuation allowance to reflect the estimated amount of deferred tax assets that may not be realized, related to state tax credits, state net operating loss and capital loss carryforwards. A reconciliation of the beginning and ending amount of the valuation allowance is presented in the table below:
Year Ended December 31,
(in millions)202420232022
Valuation allowance at January 1$8 $8 $5 
Charged to net income— — 3 
Valuation allowance at December 318 8 8 
Uncertain Tax Positions
A reconciliation of the beginning and ending amount of unrecognized tax benefits (excluding interest and penalties) related to uncertain income tax provisions, which would affect the effective tax rate if recognized, is presented in the table below:
Year Ended December 31,
(in millions)202420232022
Unrecognized tax benefits at January 1$7 $7 $7 
Additions for tax positions of prior periods
1 — — 
Additions for tax positions of current period
2 2 2 
Reductions for tax positions of prior period:
Lapse of applicable statute of limitations
(2)(2)(2)
Unrecognized tax benefits at December 31$8 $7 $7 
As of December 31, 2024 and 2023, the total amount of gross interest and penalties accrued were immaterial. The unrecognized tax benefit, including accrued interest and penalties, is included in other non-current liabilities on the consolidated balance sheets.
It is reasonably possible the amount of the unrecognized benefit could increase or decrease within the next twelve months, which would have an impact on net income.