Income Taxes |
6 Months Ended | ||||||
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Jun. 30, 2025 | |||||||
| Income Tax Disclosure [Abstract] | |||||||
| Income Taxes |
We estimate our annual effective tax rate to be 24.3% for the full year 2025, which differs from the U.S. federal statutory rate due to state and foreign income taxes, federal taxation of international operations, and nondeductible executive compensation, partially offset by federal tax credits generated. Our actual effective tax rate of 27.9% for the six months ended June 30, 2025 compared to the estimated annual effective tax rate of 24.3%, was primarily due to shortfalls recognized for employee share-based compensation, net of disallowed executive compensation. On July 4, 2025, the One Big Beautiful Bill Act, or OBBBA, was signed into law in the U.S., which includes a broad range of tax reform provisions. The Company is currently assessing the impact of the new legislation on our consolidated financial statements. The Organization for Economic Co-operation and Development’s, or OECD, Pillar Two Initiative introduced a 15% global minimum tax for certain multinational groups exceeding minimum annual global revenue thresholds. Some countries in which the Company operates have enacted legislation adopting the minimum tax effective January 1, 2024. As of June 30, 2025, we do not expect the implementation of the OECD Pillar Two global minimum tax rules, including the transitional safe harbor provisions, to have a material impact on our consolidated financial statements. We continue to monitor legislative developments and interpretive guidance across relevant jurisdictions and will assess the potential implications of these rules and potential changes in our financial forecast and include any appropriate minimum tax in our annual effective tax rate for the calendar year. In June 2024, the State of California enacted S.B. 167, which suspends the use of net operating losses, or NOLs, for the tax period from January 1, 2024 to December 31, 2026 for net business income of $1.0 million or more, as well as limits the utilization of research and development tax credits to $5.0 million each year. The State of California also passed S.B. 175 to provide for a potential early sunset of NOLs in either 2025 or 2026 if necessary. We have analyzed the effect of both these laws on our financial statements. We are estimating $4.6 million utilization of our California research and development tax credits for the tax year ending December 31, 2025.
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