v3.24.4
Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes
Note 14 – Income Taxes

Our sources of Income before income taxes were as follows:
Year Ended December 31,
(in millions)202420232022
U.S. income$14,607 $10,943 $3,116 
Foreign income105 56 30 
Income before income taxes$14,712 $10,999 $3,146 

Income tax expense is summarized as follows:
Year Ended December 31,
(in millions)202420232022
Current tax (expense) benefit
Federal$(57)$(42)$22 
State(179)(28)(64)
Foreign(17)(12)(22)
Total current tax expense(253)(82)(64)
Deferred tax (expense) benefit
Federal(2,743)(2,150)(628)
State(348)(417)77 
Foreign(29)(33)59 
Total deferred tax expense(3,120)(2,600)(492)
Total income tax expense$(3,373)$(2,682)$(556)

The reconciliation between the U.S. federal statutory income tax rate and our effective income tax rate is as follows:
Year Ended December 31,
202420232022
Federal statutory income tax rate21.0 %21.0 %21.0 %
State taxes, net of federal benefit3.3 4.2 4.5 
Effect of law and rate changes0.1 (0.1)(5.3)
Change in valuation allowance(0.2)(0.2)(0.8)
Foreign taxes0.3 0.4 0.7 
Permanent differences0.3 (0.1)(0.2)
Federal tax credits(1.1)(0.8)(2.4)
Equity-based compensation(0.3)(0.4)(1.2)
Non-deductible compensation(0.1)0.5 1.2 
Other, net(0.4)(0.1)0.2 
Effective income tax rate22.9 %24.4 %17.7 %
Significant components of deferred income tax assets and liabilities, tax effected, are as follows:
(in millions)December 31,
2024		December 31,
2023
Deferred tax assets
Loss carryforwards$3,844 $6,227 
Lease liabilities7,781 8,355 
Reserves and accruals958 1,177 
Other3,959 4,459 
Deferred tax assets, gross16,542 20,218 
Valuation allowance(259)(306)
Deferred tax assets, net16,283 19,912 
Deferred tax liabilities
Spectrum licenses19,527 19,006 
Property and equipment5,874 6,142 
Lease right-of-use assets6,508 7,043 
Other1,074 1,179 
Total deferred tax liabilities32,983 33,370 
Net deferred tax liabilities$16,700 $13,458 
Classified on the consolidated balance sheets as:
Deferred tax liabilities$16,700 $13,458 

As of December 31, 2024, we have tax effected federal net operating loss (“NOL”) carryforwards of $2.9 billion, state NOL carryforwards of $1.6 billion and foreign NOL carryforwards of $4 million, expiring through 2044. Federal and certain state NOLs of $2.8 billion generated in and after 2018 do not expire. As of December 31, 2024, our tax effected federal, state and foreign NOL carryforwards for financial reporting purposes were approximately $167 million, $701 million and $4 million, respectively, less than our NOL carryforwards for federal, state and foreign income tax purposes, due to unrecognized tax benefits of the same amount. The unrecognized tax benefit amounts exclude offsetting tax effects of $181 million in other jurisdictions.

As of December 31, 2024, we have research and development, corporate alternative minimum tax and other general business credit carryforwards with a combined value of $582 million for federal income tax purposes, an immaterial amount of which begins to expire in 2039.

As of December 31, 2024, 2023 and 2022, our valuation allowance was $259 million, $306 million and $375 million, respectively. The change from December 31, 2023 to December 31, 2024 primarily related to a reduction in the valuation allowance against federal and state deferred tax assets resulting from a change in expected utilization of accumulated capital losses. The change from December 31, 2022 to December 31, 2023 primarily related to a reduction in the valuation allowance against deferred tax assets in certain state jurisdictions resulting from expiration of the related state tax attributes.

We file income tax returns in the U.S. federal jurisdiction and in various state and foreign jurisdictions. We are currently under examination by various states. Management does not believe the resolution of any of the audits will result in a material change to our financial condition, results of operations or cash flows. The IRS has concluded audits of certain of our federal tax returns, most recently the 2020 tax year; however, NOL and other carryforwards for certain prior periods remain open for examination. U.S. federal, state and foreign examination for years prior to 2005 are generally closed.

A reconciliation of the beginning and ending amount of unrecognized tax benefits were as follows:
Year Ended December 31,
(in millions)202420232022
Unrecognized tax benefits, beginning of year$1,477 $1,254 $1,217 
Gross increases to tax positions in prior periods140 19 31 
Gross decreases to tax positions in prior periods(201)(39)(65)
Gross increases to current period tax positions132 256 77 
Gross decreases due to settlements with taxing authorities(11)— (3)
Gross decreases due to statute of limitations lapse(67)(13)(3)
Unrecognized tax benefits, end of year$1,470 $1,477 $1,254 
As of December 31, 2024, 2023 and 2022, we had $1.3 billion, $1.3 billion and $962 million, respectively, in unrecognized tax benefits that, if recognized, would affect our annual effective tax rate. Penalties and interest on income tax assessments are included in Selling, general and administrative and Interest expense, respectively, on our Consolidated Statements of Comprehensive Income. The accrued interest and penalties associated with unrecognized tax benefits are insignificant. It is possible that the amount of unrecognized tax benefits related to our uncertain tax positions may change within the next 12 months.