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Income Taxes | 12 Months Ended
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Dec. 31, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Income before income taxes for the years ended December 31, 2022, 2021 and 2020 consists entirely of domestic earnings. The provision for income taxes charged to income for the years ended December 31, 2022, 2021 and 2020 consisted of the following:
(in thousands) | 2022 |  | 2021 |  | 2020
Current |  |  |  |  |
Federal Income Taxes | $ | 31,949 |  |  | $ | 6,806 |  |  | $ | 3,631 |
State Income Taxes | 9,568 |  |  | 939 |  |  | 2,415 |
Deferred |  |  |  |  |
Federal Income Taxes | 22,480 |  |  | 18,180 |  |  | 11,450 |
State Income Taxes | 9,943 |  |  | 10,716 |  |  | 3,751 |
Tax Credits |  |  |  |  |
North Dakota Wind Tax Credit Amortization, Net of Federal Tax | (586) |  |  | (586) |  |  | (1,033) |
Investment Tax Credit Amortization | (3) |  |  | (3) |  |  | (8) |
Total | $ | 73,351 |  |  | $ | 36,052 |  |  | $ | 20,206 |
The reconciliation of the statutory federal income tax rate to our effective tax rate for each of the years ended December 31, 2022, 2021 and 2020 is as follows:
| 2022 |  | 2021 |  | 2020
Income Taxes at Federal Statutory Rate | $ | 75,082 |  | 21.0 | % |  | $ | 44,692 |  | 21.0 | % |  | $ | 24,372 |  | 21.0 | %
Increases (Decreases) in Tax from: |  |  |  |  |  |  |  |
State Taxes on Income, Net of Federal Tax | 15,049 |  | 4.2 |  |  | 9,962 |  | 4.7 |  |  | 4,597 |  | 4.0 |
Production Tax Credits (PTCs) | (14,985) |  | (4.2) |  |  | (12,503) |  | (5.9) |  |  | (1,250) |  | (1.1) |
Amortization of Excess Deferred Income Taxes | (1,625) |  | (0.5) |  |  | (4,262) |  | (2.0) |  |  | (4,167) |  | (3.6) |
North Dakota Wind Tax Credit Amortization, Net of Federal Tax | (586) |  | (0.2) |  |  | (586) |  | (0.3) |  |  | (1,033) |  | (0.9) |
Allowance for Equity Funds Used During Construction | (440) |  | (0.1) |  |  | (214) |  | (0.1) |  |  | (796) |  | (0.7) |
Other, Net | 856 |  | 0.3 |  |  | (1,037) |  | (0.5) |  |  | (1,517) |  | (1.3) |
Income Taxes at Effective Tax Rate | $ | 73,351 |  | 20.5 | % |  | $ | 36,052 |  | 16.9 | % |  | $ | 20,206 |  | 17.4 | %
We began to generate PTCs from our Merricourt wind farm in the fourth quarter of 2020, once the asset was placed in service and commenced operations. Deferred tax assets and liabilities were composed of the following on December 31, 2022 and 2021:
(in thousands) | 2022 |  | 2021
Deferred Tax Assets |  |  |
Employee Benefits | $ | 39,216 |  |  | $ | 41,842 |
Regulatory Liabilities | 57,353 |  |  | 75,293 |
Tax Credit Carryforwards, net of federal impact | 20,209 |  |  | 27,965 |
Cost of Removal | 37,360 |  |  | 26,512 |
Net Operating Loss Carryforward, net of federal impact | 1,853 |  |  | 1,323 |
Other | 12,107 |  |  | 11,067 |
Total Deferred Tax Assets | 168,098 |  |  | 184,002 |
Deferred Tax Liabilities |  |  |
Differences Related to Property | (334,201) |  |  | (297,981) |
Retirement Benefits Regulatory Asset | (22,789) |  |  | (40,766) |
Pension Expense | (24,269) |  |  | (24,578) |
Other | (8,141) |  |  | (8,945) |
Total Deferred Tax Liabilities | (389,400) |  |  | (372,270) |
Deferred Income Taxes | $ | (221,302) |  |  | $ | (188,268) |
The following is a schedule of tax credits and tax net operating losses available as of December 31, 2022 and the respective periods of expiration:
(in thousands) | Amount |  | 2023-2029 |  | 2030-2037 |  | 2038-2043
State Net Operating Losses | $ | 2,348 |  |  | $ | — |  |  | $ | 2,348 |  |  | $ | — |
State Tax Credits | 25,578 |  |  | — |  |  | — |  |  | 25,578 |
The following table summarizes the activity for unrecognized tax benefits for the years ended December 31, 2022, 2021 and 2020:
(in thousands) | 2022 |  | 2021 |  | 2020
Balance on January 1 | $ | 827 |  |  | $ | 771 |  |  | $ | 1,488 |
Increases (decreases) for tax positions taken during a prior period | 44 |  |  | 11 |  |  | (178) |
Increases for tax positions taken during the current period | 260 |  |  | 189 |  |  | 175 |
Decreases due to settlements with taxing authorities | — |  |  | — |  |  | (575) |
Decreases as a result of a lapse of applicable statutes of limitations | (208) |  |  | (144) |  |  | (139) |
Balance on December 31 | $ | 923 |  |  | $ | 827 |  |  | $ | 771 |
The balance of unrecognized tax benefits as of December 31, 2022 would reduce our effective tax rate if recognized. The total amount of unrecognized tax benefits as of December 31, 2022 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. The Company and its subsidiaries file a consolidated U.S. federal income tax return and various state income tax returns. As of December 31, 2022, with limited exceptions, we are no longer subject to examinations by taxing authorities for tax years prior to 2019 for federal and North Dakota income taxes and prior to 2018 for Minnesota state income taxes.

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