Entity information:
Income Taxes

On December 22, 2017, tax reform legislation was signed into law which, among other things, reduced the federal corporate income tax rate from 35% to 21% effective January 1, 2018. As a result, NEE, including FPL, performed an analysis to preliminarily revalue its deferred income taxes and included an estimate of changes in the balances in NEE's and FPL's December 31, 2017 financial statements. At December 31, 2017, the revaluation reduced NEE’s net deferred income tax liabilities by approximately $6.5 billion, of which $4.5 billion related to net deferred income tax liabilities at FPL and the remaining $2 billion related to net deferred income tax liabilities at NEER. The $2 billion reduction in NEER’s deferred income tax liabilities increased NEER’s 2017 net income. The $4.5 billion reduction in FPL’s deferred income tax liabilities was recorded as a regulatory liability. While NEE and FPL believe that the provisional tax reform adjustments are reasonable estimates of the effects on its existing deferred taxes, additional analysis and detailed reviews are still being performed to finalize the accounting for the remeasurement of deferred tax assets and liabilities as a result of the enactment of tax reform.



The components of income taxes are as follows:
 
NEE
 
FPL
 
Years Ended December 31,
 
Years Ended December 31,
 
2017
 
2016
 
2015
 
2017
 
2016
 
2015
 
(millions)
Federal:
 
 
 
 
 
 
 
 
 
 
 
Current
$
100

 
$
72

 
$
10

 
$
168

 
$
72

 
$
423

Deferred
(1,040
)
 
1,075

 
1,194

 
776

 
830

 
399

Total federal
(940
)
 
1,147

 
1,204

 
944

 
902

 
822

State:
 

 
 

 
 

 
 

 
 

 
 

Current
88

 
76

 
31

 
29

 
57

 
58

Deferred
199

 
160

 
(7
)
 
133

 
92

 
77

Total state
287

 
236

 
24

 
162

 
149

 
135

Total income tax expense (benefit)
$
(653
)
 
$
1,383

 
$
1,228

 
$
1,106

 
$
1,051

 
$
957



A reconciliation between the effective income tax rates and the applicable statutory rate is as follows:
 
NEE
 
FPL
 
Years Ended December 31,
 
Years Ended December 31,
 
2017
 
2016
 
2015
 
2017
 
2016
 
2015
Statutory federal income tax rate
35.0
 %
 
35.0
 %
 
35.0
 %
 
35.0
 %
 
35.0
 %
 
35.0
 %
Increases (reductions) resulting from:
 

 
 

 
 

 
 

 
 

 
 

State income taxes - net of federal income tax benefit
2.9

 
3.5

 
0.4

 
3.5

 
3.5

 
3.4

Tax reform rate change
(41.2
)
 
—

 
—

 
(0.5
)
 
—

 
—

PTCs and ITCs - NEER
(8.4
)
 
(3.9
)
 
(4.1
)
 
—

 
—

 
—

Convertible ITCs - NEER
0.6

 
(1.7
)
 
(0.8
)
 
—

 
—

 
—

Adjustments associated with Canadian assets
—

 
(0.7
)
 
—

 
—

 
—

 
—

Other - net
(2.9
)
 
(0.7
)
 
0.3

 
(1.0
)
 
(0.7
)
 
(1.7
)
Effective income tax rate
(14.0
)%
 
31.5
 %
 
30.8
 %
 
37.0
 %
 
37.8
 %
 
36.7
 %


The income tax effects of temporary differences giving rise to consolidated deferred income tax liabilities and assets are as follows:
 
NEE
 
FPL
 
December 31,
 
December 31,
 
2017
 
2016
 
2017
 
2016
 
(millions)
Deferred tax liabilities:
 
 
 
 
 
 
 
Property-related
$
9,030

 
$
13,094

 
$
6,045

 
$
8,882

Pension
364

 
454

 
342

 
502

Nuclear decommissioning trusts
226

 
253

 
—

 
—

Net unrealized gains on derivatives
263

 
581

 
—

 
—

Investments in partnerships and joint ventures
442

 
603

 
—

 
—

Other
871

 
1,272

 
584

 
796

Total deferred tax liabilities
11,196

 
16,257

 
6,971

 
10,180

Deferred tax assets and valuation allowance:
 
 
 
 
 
 
 
Decommissioning reserves
306

 
454

 
271

 
401

Postretirement benefits
74

 
145

 
57

 
93

Net operating loss carryforwards
482

 
427

 
3

 
3

Tax credit carryforwards
3,126

 
3,059

 
—

 
—

ARO and accrued asset removal costs
210

 
777

 
146

 
699

Regulatory liabilities(a)
1,267

 
84

 
1,273

 
84

Other
646

 
940

 
216

 
359

Valuation allowance(b)
(252
)
 
(269
)
 
—

 
—

Net deferred tax assets
5,859

 
5,617

 
1,966

 
1,639

Net deferred income taxes
$
5,337

 
$
10,640

 
$
5,005

 
$
8,541

______________________
(a)
2017 reflects the tax gross up of regulatory liabilities associated with tax reform.
(b)
Reflects a valuation allowance related to the solar projects in Spain, deferred state tax credits and state operating loss carryforwards.
 
Deferred tax assets and liabilities are included on the consolidated balance sheets as follows:
 
NEE
 
FPL
 
December 31,
 
December 31,
 
2017
 
2016
 
2017
 
2016
 
 
 
(millions)
 
 
Noncurrent other assets
$
417

 
$
461

 
$
—

 
$
—

Deferred income taxes - noncurrent liabilities
(5,754
)
 
(11,101
)
 
(5,005
)
 
(8,541
)
Net deferred income taxes
$
(5,337
)
 
$
(10,640
)
 
$
(5,005
)
 
$
(8,541
)

 
The components of NEE's deferred tax assets relating to net operating loss carryforwards and tax credit carryforwards at December 31, 2017 are as follows:
 
Amount
 
Expiration
Dates
 
(millions)
 
 
Net operating loss carryforwards:
 
 
 
Federal
$
158

 
2026-2037
State
232

 
2018-2037
Foreign
92

(a) 
2018-2036
Net operating loss carryforwards
$
482

 
 
Tax credit carryforwards:
 
 
 
Federal
$
2,779

 
2026-2037
State
347

(b) 
2018-2044
Tax credit carryforwards
$
3,126

 
 

______________________
(a)
Includes $64 million of net operating loss carryforwards with an indefinite expiration period.
(b)
Includes $188 million of ITC carryforwards with an indefinite expiration period.