|NRG ENERGY, INC. filed this Form 10-K on 03/01/2018|
NRG's interest expense decreased by $42 million for the year ended December 31, 2016, compared to the same period in 2015, due to the following:
Income Tax Expense
For the year ended December 31, 2016, NRG recorded an income tax expense of $5 million on a pre-tax loss of $978 million. For the same period in 2015, NRG recorded an income tax expense of $1,345 million on pre-tax loss of $4,986 million. The effective tax rate was (0.5)% and (27.0)% for the years ended December 31, 2016 and 2015, respectively.
For the year ended December 31, 2016, NRG's overall effective tax rate was different than the statutory rate of 35% primarily due to recording of a valuation allowance on the federal and certain state net deferred tax assets that may not be realizable under a “more likely than not” measurement. In addition, a portion of the book goodwill impairment is classified as a permanent reversal impacting the effective tax rate.
The effective income tax rate may vary from period to period depending on, among other factors, the geographic and business mix of earnings and losses and changes in valuation allowances in accordance with ASC 740. These factors and others, including the Company's history of pre-tax earnings and losses, are taken into account in assessing the ability to realize deferred tax assets.