Income Taxes |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Taxes | 10. INCOME TAXES The determination of the annual effective tax is based upon a number of significant estimates and judgments, including the estimated annual pretax income in each tax jurisdiction in which we operate and the ongoing development of tax planning strategies during the year. In addition, our provision for income taxes can be impacted by changes in tax rates or laws, the finalization of tax audits and reviews, as well as other factors that cannot be predicted with certainty. As such, there can be significant volatility in interim tax provisions. The following is a summary of our provision for income taxes and effective tax rate:
The effective tax rate for the quarter and year to date ended June 30, 2025 was impacted by the tax effect of stock-based compensation, which decreased the effective tax rate for the quarter and year to date by 0.3% and 2.9%, respectively. The effective tax rate for the quarter and year to date ended June 30, 2025 also includes the release of previously recorded tax reserves, which decreased the effective tax rate for the quarter and year to date by 1.7% and 1.5%, respectively. The effective tax rate for the quarter and year to date ended June 30, 2024 was impacted by the tax effect of stock-based compensation, which decreased the effective tax rate for the quarter and year to date by 0.2% and 0.7%, respectively. The effective tax rate for the quarter and year to date ended June 30, 2024 also includes the release of previously recorded tax reserves, which decreased the effective tax rate for the quarter and year to date by 1.2% and 1.3%, respectively. As of June 30, 2025, a valuation allowance of $12.0 million was maintained with respect to our equity investment and state net operating losses. The income tax rate for the quarter and year to date ended June 30, 2025 does not take into account the possible future reduction of the liability for unrecognized tax benefits. The impact of a reduction to the liability will be treated as a discrete item in the period the reduction occurs. We recognize interest and penalties related to unrecognized tax benefits in tax expense. As of June 30, 2025, we had accrued $4.8 million as an estimate for reasonably possible interest and accrued penalties. Our tax returns are routinely examined by federal, state and local tax authorities and these audits are at various stages of completion at any given time. The Company’s federal income tax filings are open to examinations for the tax years ended December 31, 2021 and forward. On July 4, 2025, President Trump signed into law Public Law No. 119-21 (2025) (the “Act”), nicknamed the “One Big Beautiful Bill,” which introduces comprehensive tax reform measures. The Company is currently evaluating the potential impacts of the legislation. Certain provisions of the Act may result in favorable adjustments to deferred taxes and income taxes payable, particularly those related to the 100% bonus depreciation for qualifying assets placed in service after January 19, 2025, and the immediate expensing of domestic research expenditures. While we continue to assess the overall effect of the new law on our consolidated financial statements, we currently do not expect the legislation to have a material impact on our estimated annual effective tax rate for 2025. |
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