Income Taxes |
6 Months Ended |
|---|---|
Jun. 30, 2025 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | INCOME TAXES The Company's earnings are primarily domestic, and its effective income tax rates on earnings from operations for the three months ended June 30, 2025 and 2024, were comparable at 19.1% and 19.9%, respectively. For the six months ended June 30, 2025 and 2024, the Company's effective income tax rates on earnings from operations were 19.7% and 18.5%, respectively. The higher effective tax rate for the six months ended June 30, 2025, was primarily attributable to excess tax benefits recognized on stock-based compensation recorded in the prior period. For the three and six months ended June 30, 2025, the Company’s effective tax rate differed from the federal statutory corporate income tax rate of 21% primarily due to research and development tax credits for the current periods. The Company's unrecognized tax benefits increased by $3 million and $6 million during the three and six months ended June 30, 2025, respectively. As of June 30, 2025, the estimated amounts of the Company's unrecognized tax benefits, excluding interest and penalties, were liabilities of $116 million. Assuming a sustainment of these tax positions, a reversal of $93 million of the accrued amounts would favorably affect the Company's effective federal income tax rate in future periods. The Company recognizes interest and penalties related to unrecognized tax benefits as income tax expense. For the three and six months ended June 30, 2025, interest and penalties resulting from the unrecognized tax benefits noted above increased income tax expense by $1 million and $3 million, respectively. Non-current state income taxes include deferred state income taxes, which reflect the change in deferred state tax assets and liabilities and the tax expense or benefit associated with changes in state unrecognized tax benefits in the relevant period. These amounts are recorded within operating income. Current period state income tax expense is charged to contract costs and included in cost of sales and service revenues in segment operating income. On July 4, 2025, the One Big Beautiful Bill Act (the “Act”) was signed into law. The Act provides for significant changes to the U.S. Internal Revenue Code of 1986, as amended, that impact corporations, including making certain business deductions permanent, such as bonus depreciation and immediate expensing of domestic research and development expenditures. In addition, the Act allows an acceleration of the deduction for the remaining unamortized domestic research and development expenditures capitalized during the 2022 through 2024 tax years. These unamortized expenditures can be deducted over or two years. The Company expects the immediate expensing of domestic research expenditures retroactive to January 1, 2025, coupled with increased bonus depreciation and the acceleration of the deduction for previously capitalized domestic research expenditures, to decrease 2025 federal cash tax payments by $147 million. While the Company does not anticipate any material impacts to total tax expense or the effective tax rate, the Company is still evaluating provisions of the Act to determine the full effect on its financial position, results of operations, and cash flows.
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