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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income before income taxes for the years ended December 31, 2024, 2023 and 2022 consists entirely of domestic earnings.
The provision for income taxes charged to income for the years ended December 31, 2024, 2023 and 2022 consisted of the following:
(in thousands)202420232022
Current
Federal Income Taxes$36,238 $41,253 $31,949 
State Income Taxes6,533 15,126 9,568 
Deferred
Federal Income Taxes13,078 9,832 22,480 
State Income Taxes9,979 3,676 9,943 
Tax Credits
North Dakota Wind Tax Credit Amortization, Net of Federal Tax(586)(586)(586)
Investment Tax Credit Amortization(12)(3)(3)
Total$65,230 $69,298 $73,351 
The reconciliation of the statutory federal income tax rate to our effective tax rate for each of the years ended December 31, 2024, 2023 and 2022 is as follows:
202420232022
Income Taxes at Federal Statutory Rate$77,047 21.0 %$76,332 21.0 %$75,082 21.0 %
Increases (Decreases) in Tax from:
State Taxes on Income, Net of Federal Tax14,360 3.9 14,429 4.0 15,049 4.2 
Production Tax Credits (PTCs)(20,106)(5.5)(17,394)(4.8)(14,985)(4.2)
Amortization of Excess Deferred Income Taxes(2,788)(0.8)(2,205)(0.6)(1,625)(0.5)
North Dakota Wind Tax Credit Amortization, Net of Federal Tax(586)(0.2)(586)(0.2)(586)(0.2)
Other, Net(2,697)(0.6)(1,278)(0.3)416 0.2 
Income Taxes at Effective Tax Rate$65,230 17.8 %$69,298 19.1 %$73,351 20.5 %
PTCs, North Dakota wind tax credits and excess deferred income taxes arising from the federal tax rate reduction in the 2017 Tax Cuts and Jobs Act are returned to customers as a reduction of the rates they are charged and result in a reduction of operating revenues.
Deferred tax assets and liabilities were composed of the following on December 31, 2024 and 2023:
(in thousands)20242023
Deferred Tax Assets  
Employee Benefits$37,456 $39,959 
Regulatory Liabilities52,664 56,479 
Tax Credit Carryforwards18,268 21,836 
Cost of Removal35,374 32,993 
Asset Retirement Obligations10,948 9,494 
Net Operating Loss Carryforward2,289 2,336 
Other19,449 11,310 
Total Deferred Tax Assets$176,448 $174,407 
Deferred Tax Liabilities
Differences Related to Property$(375,120)$(347,885)
Retirement Benefits Regulatory Asset(22,892)(22,458)
Pension Expense(26,034)(24,875)
Other(20,147)(16,462)
Total Deferred Tax Liabilities(444,193)(411,680)
Deferred Income Taxes$(267,745)$(237,273)
As of December 31, 2024, we had net operating loss carryforwards for state tax purposes totaling $2.3 million that expire between 2029 and 2037, and state tax credits totaling $18.3 million which expire between 2040 and 2043.
The following table summarizes the activity for unrecognized tax benefits for the years ended December 31, 2024, 2023 and 2022:
(in thousands)202420232022
Balance on January 1$1,489 $923 $827 
Increases (Decreases) for tax positions taken during a prior period
(189)596 44 
Increases for tax positions taken during the current period188 163 260 
Decreases due to settlements with taxing authorities— — — 
Decreases as a result of a lapse of applicable statutes of limitations(363)(193)(208)
Balance on December 31$1,125 $1,489 $923 
The balance of unrecognized tax benefits as of December 31, 2024 would reduce our effective tax rate if recognized. The total amount of unrecognized tax benefits as of December 31, 2024 is not expected to change significantly within the next 12 months.
The Company and its subsidiaries file a consolidated U.S. federal income tax return and various state income tax returns. As of December 31, 2024, with limited exceptions, we are no longer subject to examinations by taxing authorities for tax years prior to 2021 for federal and North Dakota income taxes and prior to 2020 for Minnesota state income taxes.