Income Taxes (Tables)

12 Months Ended

Dec. 31, 2014

Components of income tax expense were as follows for the years ended December 31:

Millions	2014		2013		2012
Current tax expense:
Federal	$	2,029	$	1,738	$	1,335
State		239		199		153
Total current tax expense		2,268		1,937		1,488
Deferred tax expense:
Federal		667		659		760
State		136		119		120
Total deferred tax expense		803		778		880
Unrecognized tax benefits:
Federal		86		(54)		5
State		6		(1)		2
Total unrecognized tax benefits expense/(benefits)		92		(55)		7
Total income tax expense	$	3,163	$	2,660	$	2,375

For the years ended December 31, reconciliations between statutory and effective tax rates are as follows:

Tax Rate Percentages	2014		2013		2012
Federal statutory tax rate	35.0	%	35.0	%	35.0	%
State statutory rates, net of federal benefits	3.1		3.1		3.1
Deferred tax adjustments	-		(0.1)		(0.1)
Tax credits	(0.4)		(0.2)		(0.5)
Other	0.2		(0.1)		0.1
Effective tax rate	37.9	%	37.7	%	37.6	%

Deferred income tax (liabilities)/assets were comprised of the following at December 31:

Millions	2014		2013
Deferred income tax liabilities:
Property	$	(15,173)	$	(14,448)
Other		(411)		(260)
Total deferred income tax liabilities		(15,584)		(14,708)
Deferred income tax assets:
Accrued wages		74		71
Accrued casualty costs		228		223
Accrued stock compensation		69		66
Debt and leases		86		41
Retiree benefits		392		100
Credits		164		182
Other		168		130
Total deferred income tax assets	$	1,181	$	813
Net deferred income tax liability	$	(14,403)	$	(13,895)
Current portion of deferred taxes	$	277	$	268
Non-current portion of deferred taxes		(14,680)		(14,163)
Net deferred income tax liability	$	(14,403)	$	(13,895)

A reconciliation of changes in unrecognized tax benefits liabilities/(assets) from the beginning to the end of the reporting period is as follows:

Millions	2014		2013		2012
Unrecognized tax benefits at January 1	$	59	$	115	$	107
Increases for positions taken in current year		92		24		29
Increases for positions taken in prior years		21		15		4
Decreases for positions taken in prior years		(14)		(30)		(19)
Payments to and settlements with taxing authorities		(7)		(63)		-
Increases/(decreases) for interest and penalties		1		-		(4)
Lapse of statutes of limitations		(1)		(2)		(2)
Unrecognized tax benefits at December 31	$	151	$	59	$	115

The unrecognized tax benefits that would reduce our effective tax rate are as follows:

Millions	2014		2013		2012
Unrecognized tax benefits that would reduce the effective tax rate	$	33	$	34	$	41
Unrecognized tax benefits that would not reduce the effective tax rate		118		25		74
Total unrecognized tax benefits	$	151	$	59	$	115