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Income Taxes
 12 Months Ended
Dec. 31, 2020
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income before income taxes for the years ended December 31, 2020, 2019 and 2018 arose in its entirety from domestic earnings. The provision for income taxes charged to income for the years ended December 31, 2020, 2019 and 2018 consisted of the following:
(in thousands)202020192018
Current
Federal Income Taxes$4,881 $5,156 $4,960 
State Income Taxes2,415 1,333 1,395 
Deferred
Federal Income Taxes11,450 8,859 8,065 
State Income Taxes3,751 3,167 4,410 
Tax Credits
Production Tax Credits(1,250)— (3,111)
North Dakota Wind Tax Credit Amortization, Net of Federal Taxes(1,033)(1,033)(1,033)
Investment Tax Credit Amortization(8)(41)(98)
Total$20,206 $17,441 $14,588 
The reconciliation of the statutory federal income tax rate to our effective tax rate for each of the years ended December 31, 2020, 2019 and 2018 is as follows:
202020192018
Federal Statutory Rate21.0 %21.0 %21.0 %
Increases (Decreases) in Tax from:
State Taxes on Income, Net of Federal Tax4.0 3.4 5.3 
Differences Reversing in Excess of Federal Rates(3.6)(3.2)(3.6)
Production Tax Credits (PTCs)(1.1)— (3.2)
North Dakota Wind Tax Credit Amortization, Net of Federal Taxes(0.9)(1.0)(1.1)
Allowance for Equity Funds Used During Construction(0.7)(0.5)(0.4)
Corporate-Owned Life Insurance(0.6)(0.7)— 
Excess Tax Deduction on Stock Awards(0.4)(0.7)(0.7)
Other, Net(0.3)(1.6)(2.3)
Effective Tax Rate17.4 %16.7 %15.0 %
The eligibility period to earn federal PTCs expired for certain of our wind farms in 2018. In 2020, we began to generate PTCs from our Merricourt wind farm placed in service in the fourth quarter of the year.
Deferred tax assets and liabilities were composed of the following on December 31, 2020 and 2019:
(in thousands)20202019
Deferred Tax Assets  
Benefit Liabilities$41,292 $38,130 
Retirement Benefits Liabilities40,650 36,206 
Tax Credit Carryforward35,132 48,910 
Regulatory Tax Liability33,124 35,700 
Cost of Removal25,920 25,604 
Differences Related to Property7,486 6,979 
Net Operating Loss Carryforward1,379 1,475 
Other3,423 6,077 
Valuation Allowance(800)(800)
Total Deferred Tax Assets$187,606 $198,281 
Deferred Tax Liabilities
Differences Related to Property$(271,064)$(268,495)
Retirement Benefits Regulatory Asset(40,650)(36,206)
Excess Tax Over Book Pension(18,696)(17,556)
Other(10,572)(7,965)
Total Deferred Tax Liabilities$(340,982)$(330,222)
Deferred Income Taxes$(153,376)$(131,941)
Schedule of expiration of tax credits and tax net operating losses available as of December 31, 2020:
(in thousands)Amount2022-20322033-20382039-2043
Federal Tax Credits$10,440 $— $7,896 $2,544 
State Net Operating Losses1,729 1,729 — — 
State Tax Credits30,509 — 1,002 29,507 
The following table summarizes the activity for unrecognized tax benefits for the years ended December 31, 2020, 2019 and 2018:
(in thousands)202020192018
Balance on January 1$1,488 $1,282 $684 
Increases (decreases) for tax positions taken during a prior period(178)37 6 
Increases for tax positions taken during the current period175 339 778 
Decreases due to settlements with taxing authorities(575)— — 
Decreases as a result of a lapse of applicable statutes of limitations(139)(170)(186)
Balance on December 31$771 $1,488 $1,282 
The balance of unrecognized tax benefits as of December 31, 2020 would reduce our effective tax rate if recognized. The total amount of unrecognized tax benefits as of December 31, 2020 is not expected to change significantly within the next 12 months. We classify interest and penalties on tax uncertainties as components of the provision for income taxes in the consolidated statements of income. There was no amount accrued for interest on tax uncertainties as of December 31, 2020.
The Company and its subsidiaries file a consolidated U.S. federal income tax return and various state income tax returns. As of December 31, 2020, with limited exceptions, we are no longer subject to examinations by taxing authorities for tax years prior to 2017 for federal and North Dakota income taxes and prior to 2015 for Minnesota state income taxes.