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INCOME TAXES
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
Income tax expense differs from the amount of income tax determined by applying the United States statutory federal income tax rate of 21% to pre-tax income due to the following:
Years Ended December 31,
(in millions)202320222021
Federal Income Tax Expense at Statutory Rate$65 $52 $49 
State Income Tax Expense, Net of Federal Deduction12 10 9 
Federal/State Tax Credits (1)
(17)(22)(10)
Allowance for Equity Funds Used During Construction(3)(1)(3)
Excess Deferred Income Taxes(8)(10)(14)
Other— 3 1 
Total Income Tax Expense$49 $32 $32 
(1)     TEP realized PTC benefits of $15 million in 2023, $19 million in 2022, and $7 million in 2021, related to Oso Grande being placed in service in May 2021.
Income Tax Expense included on the Consolidated Statements of Income consists of the following:
Years Ended December 31,
(in millions)202320222021
Current Income Tax Expense
Federal$7 $(1)$(2)
State1 — — 
Total Current Income Tax Expense8 (1)(2)
Deferred Income Tax Expense
Federal31 26 27 
Federal Investment Tax Credits(2)(1)(1)
State12 8 8 
Total Deferred Income Tax Expense41 33 34 
Total Income Tax Expense$49 $32 $32 
In 2018, the ACC Refund Order was approved requiring TEP to share EDIT amortization of the ACC-jurisdictional assets with customers. The EDIT activity of $8 million, $10 million, and $14 million was amortized from Regulatory Liabilities on the Consolidated Balance Sheets as of December 31, 2023, 2022, and 2021, respectively. TEP's TEAM allows income tax changes that materially affect TEP’s authorized revenue requirement, including changes in EDIT amortization, to be shared with customers. Effective January 1, 2021, TEP shares any changes in its EDIT amortization through the usage-based adjustor.
The significant components of deferred income tax assets and liabilities consist of the following:
December 31,
(in millions)20232022
Gross Deferred Income Tax Assets
Customer Advances and Contributions in Aid of Construction$22 $22 
Federal General Business Credits (1)
55 61 
Income Taxes Payable Through Future Rates57 60 
Other95 103 
Total Gross Deferred Income Tax Assets229 246 
Gross Deferred Income Tax Liabilities
Plant, Net(793)(735)
PPFAC(14)(31)
Plant Abandonments(11)(14)
Pensions(21)(20)
Income Taxes Recoverable Through Future Rates(1)(1)
Other(37)(36)
Total Gross Deferred Income Tax Liabilities(877)(837)
Deferred Income Taxes, Net$(648)$(591)
(1) Includes ITC and PTC carryovers.
TEP recorded no valuation allowance against tax credit and net operating loss carryforward deferred income tax assets as of December 31, 2023 and 2022. Management believes TEP will produce sufficient taxable income in the future to realize credit and loss carryforwards before they expire.
As of December 31, 2023, TEP had the following carryforward amounts:
($ in millions)AmountExpiring Year
State Credits$9 2024 - 29
Federal Investment Tax Credits12 2037 - 43
Federal Production Tax Credits 42 2041 - 43
Other Federal Credits1 2037 - 43
TEP recorded no interest expense in 2023 and 2022 related to uncertain tax positions. In addition, TEP had no interest payable, and no penalties accrued as of December 31, 2023 and 2022.
TEP has been audited by the IRS through tax year 2010. TEP's 2014 to 2022 tax years are open for audit by federal and state tax agencies.
Included in Accounts Receivable, Net and Accounts Payable on the Consolidated Balance Sheets are current income taxes receivable and payable that are due from and to affiliates, respectively. TEP had no intercompany income taxes receivable or payable as of December 31, 2023, and a receivable of $1 million as of December 31, 2022.