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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of income tax expense were:
202120202019
Current:
Federal$8,587 11,349 7,577 
State2,633 2,528 2,126 
Deferred:
Federal(3,811)(8,073)(1,929)
State960 2,576 680 
$8,369 8,380 8,454 

The following table reconciles income tax expense to the amount computed by applying the federal statutory rate to income before income taxes of $68,847, $69,895 and $32,081 in 2021, 2020 and 2019:
202120202019
Income tax at federal statutory rate$14,458 14,678 6,737 
Increase (decrease) in taxes attributable to:
State taxes, net of federal income tax benefit4,572 4,142 2,251 
Uncertain tax positions1,678 1,351 323 
Property flow-through(8,573)(9,215)(2,054)
Capitalized merger costs— (296)5,350 
Tax reform - rate change impact on deferred taxes— — 77 
Reversal of excess deferred taxes recognized in regulatory liability(3,295)(2,912)(2,355)
Pension flow-through429 92 (1,244)
Stock-based compensation(331)(333)(223)
Other items, net(569)873 (408)
$8,369 8,380 8,454 
The components of the net deferred tax liability as of December 31 was as follows:
20212020
Deferred tax assets:
Advances and contributions$24,584 22,573 
Unamortized investment tax credit599 619 
Pensions, postretirement benefits and stock-based compensation32,396 41,180 
Debt premium, net5,579 6,290 
California franchise tax514 756 
Net operating loss— 550 
Other8,128 6,792 
Total deferred tax assets71,800 78,760 
Deferred tax liabilities:
Utility plant216,497 209,541 
Pension and postretirement24,779 31,227 
Deferred gain and other-property5,901 5,875 
Regulatory asset - business combinations debt premium, net5,579 6,290 
Intangibles3,193 3,443 
Deferred revenue773 297 
Regulatory asset - income tax temporary differences, net6,867 1,195 
Section 481(a) adjustments3,111 4,763 
Other5,551 7,544 
Total deferred tax liabilities272,251 270,175 
Net deferred tax liabilities$200,451 191,415 
Management evaluates the realizability of deferred tax assets based on all available evidence, both positive and negative. The realization of deferred tax assets is dependent on our ability to generate sufficient future taxable income during periods in which the deferred tax assets are expected to reverse. Based on all available evidence, management believes it is more likely than not that SJW Group will realize the benefits of its deferred tax assets. Accordingly, the valuation allowance relating to deferred tax assets acquired from CTWS was released in 2020 through purchase accounting adjustments made within the measurement period. Net operating loss carryforwards expire beginning in 2032 and ending in 2039. As of December 31, 2021, the estimated amount of net operating loss carryforwards available to offset future taxable income for Connecticut purposes is $26,820. The estimated state tax credit carryforwards are $667 which will expire beginning in 2023 and ending in 2040.
The change in the net deferred tax liabilities of $9,036 in 2021 included other non-cash items primarily consisting of regulatory assets and liabilities relating to income tax temporary differences.
The total amount of unrecognized tax benefits, before the impact of deductions for state taxes, excluding interest and penalties was $7,961 and $6,468 as of December 31, 2021 and 2020, respectively. The amount of tax benefits, net of any federal benefits for state taxes that would impact the effective rate, if recognized, is approximately $7,009 and $5,600 as of December 31, 2021 and 2020, respectively.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
202120202019
Balance at beginning of year$6,468 3,834 1,382 
Increase related to tax positions taken during the current year1,376 1,104 351 
Increase related to tax positions taken during a prior year117 1,530 3,483 
Reductions related to tax positions taken in a prior year— — (1,382)
Balance at end of year$7,961 6,468 3,834 
The increase in gross unrecognized tax benefits in 2021 was primarily due to the uncertain tax position relating to repairs tax deductions.
SJW Group’s policy is to classify interest and penalties associated with unrecognized tax benefits, if any, in tax expense. Accrued interest expense, net of the benefit of tax deductions which would be available on the payment of such interest, is approximately $376 as of December 31, 2021. SJW Group has not accrued any penalties for unrecognized tax benefits. The amount of interest recognized in 2021 was an increase to expense of $270.
SJW Group does not foresee material changes to its gross uncertain tax liability within the next 12 months following December 31, 2021.
SJW Group files U.S. federal income tax returns and income tax returns in various states and is subject to ordinary statute of limitation of three years for federal and three or four years for different state returns. However, due to tax attribute carryforwards, SJW Group is subject to examination for tax years 2009 forward for federal and 2012 forward for state returns of CTWS and its subsidiaries. The statute of limitation for SJW Group returns is closed for these extended years and remains open for 2018 and forward for federal and 2017 or 2018 and forward for different states.