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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | Note 12—Income Taxes The components of the income tax expense from continuing operations are as follows:
| Years Ended December 31,
| 2024 |  | 2023 |  | 2022
| (Dollars in millions)
Income tax expense: |  |  |  |  |
Federal and foreign |  |  |  |  |
Current | $ | 396 |  |  | 432 |  |  | 514 |
Deferred | 34 |  |  | 19 |  |  | 6 |
State and local |  |  |  |  |
Current | 94 |  |  | 107 |  |  | 137 |
Deferred | 3 |  |  | 3 |  |  | 14 |
Income tax expense | $ | 527 |  |  | 561 |  |  | 671 |
The effective income tax rate for continuing operations differs from the statutory tax rate as follows:
| Years Ended December 31,
| 2024 |  | 2023 |  | 2022
| (Percentage of pre-tax income (loss))
Effective income tax rate: |  |  |  |  |
Federal statutory income tax rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State income taxes-net of federal effect | 3.7 | % |  | (31.3) | % |  | 4.3 | %
Goodwill impairment | — | % |  | (187.2) | % |  | — | %
Change in liability for unrecognized tax position | 1.5 | % |  | (8.9) | % |  | 0.6 | %
Other | — | % |  | (1.4) | % |  | — | %
Effective income tax rate | 26.2 | % |  | (207.8) | % |  | 25.9 | %
For the years ended December 31, 2024 and 2023, our effective income tax rate was 26.2% and (207.8)%, respectively. The effective tax rate for the year ended December 31, 2023 includes a $505 million unfavorable aggregate impact of non-deductible goodwill impairment. The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities were as follows:
| As of December 31,
| 2024 |  | 2023
| (Dollars in millions)
Deferred tax liabilities: |  |  |
Property, plant and equipment | $ | (1,524) |  |  | (1,464) |
Intangible assets | (83) |  |  | (95) |
Other | (40) |  |  | (50) |
Total deferred tax liabilities | (1,647) |  |  | (1,609) |
Deferred tax assets: |  |  |
Payable to affiliate due to post-retirement benefit plan participation | 312 |  |  | 292 |
Other | 1 |  |  | — |
Gross deferred tax assets | 313 |  |  | 292 |
Net deferred tax assets | 313 |  |  | 292 |
Net deferred tax liabilities | $ | (1,334) |  |  | (1,317) |
As of December 31, 2024 and 2023, we had no established valuation allowance based on our assessment of whether it is more likely than not that our deferred tax assets will be realized. As of December 31, 2024 and 2023, the $1.3 billion net deferred tax liabilities are included in long-term liabilities on our consolidated balance sheet. With few exceptions, we are no longer subject to U.S. federal, state and local or non-U.S. income tax examinations by tax authorities for years before 2016. The Internal Revenue Service and state and local taxing authorities reserve the right to audit any period where net operating loss carryforwards are available. A reconciliation of the change in our gross unrecognized tax benefits (excluding both interest and any related federal benefit) for the years ended December 31, 2024 and 2023 are as follows:
| Years ended December 31,
| 2024 |  | 2023
| (Dollars in millions)
Unrecognized tax benefits at beginning of period | $ | 317 |  |  | 332 |
Decrease due to tax positions taken in a prior year | (11) |  |  | (1) |
Decrease due to tax positions taken in a current year | (13) |  |  | (14) |
Unrecognized tax benefits at end of period | $ | 293 |  |  | 317 |
As of December 31, 2024, the total amount of unrecognized tax benefits that, if recognized, would impact the effective income tax rate is immaterial. The unrecognized tax benefits also includes tax positions that, if recognized, would result in adjustments to other tax accounts, primarily deferred taxes, that would not impact the effective tax rate but could impact cash tax amounts payable to taxing authorities. Our policy is to reflect interest expense associated with unrecognized tax benefits in income tax expense. We had accrued interest (presented before related tax benefits) of approximately $160 million and $125 million as of December 31, 2024 and 2023, respectively. Based on our current assessment of various factors, including (i) the potential outcomes of these ongoing examinations, (ii) the expiration of statute of limitations for specific jurisdictions, (iii) the negotiated settlement of certain disputed issues, and (iv) the administrative practices of applicable taxing jurisdictions, it is reasonably possible that the related unrecognized tax benefits for uncertain tax positions previously taken may not change in the next 12 months. The actual amount of changes, if any, will depend on future developments and events, many of which are outside our control. We paid $497 million, $509 million, and $673 million related to income taxes for the years ended December 31, 2024, 2023, and 2022, respectively. In August 2022, the Inflation Reduction Act was signed into law and which, among other things, implemented a corporate alternative minimum tax (“CAMT”) on adjusted financial statement income effective for tax periods occurring after December 31, 2022. The CAMT had no material impact on our financial results as of December 31, 2024. In addition, in 2021, the Organization for Economic Co-operation and Development (“OECD”) issued Pillar Two model rules introducing a new global minimum corporate tax of 15% and the OECD and the majority of its participating countries continue to work toward the enactment of such tax. While the U.S. has not adopted Pillar Two legislation, various other governments around the world have enacted such legislation that is effective for tax periods after December 31, 2023. These global minimum tax rules have increased our administrative and compliance burdens, but the impact to our financial statements for the year ended December 31, 2024 was immaterial. We anticipate further legislative activity and administrative guidance throughout 2025 and continue to monitor evolving global tax legislation.

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