Income Taxes |
6 Months Ended |
|---|---|
Jun. 30, 2025 | |
| Income Taxes | |
| Income Taxes | Note 12. Income Taxes We record our interim provision for income taxes by applying our estimated annual effective tax rate to our year-to-date pre-tax income (loss) and adjusting for discrete tax items recorded in the period. Deferred income taxes result from temporary differences between the reporting of amounts for financial statement purposes and income tax purposes. These differences relate primarily to different methods used for income tax reporting purposes, including for depreciation and amortization, warranty and vacation accruals, and deductions related to allowances for doubtful accounts receivable and inventory reserves. Our provision for income taxes includes current federal and state income tax expense, as well as deferred federal and state income tax expense. The effective tax rate for the three months ended June 30, 2025 was an expense of 28.9%, compared to an expense of 29.2% for the three months ended June 30, 2024. The primary driver of the change in the Company’s effective tax rate was attributable to the relative impact of stock-based compensation discrete tax items. We recorded an income tax expense of $1.3 million and an income tax expense of $1.8 million for the three months ended June 30, 2025 and 2024, respectively. The effective tax rate for the six months ended June 30, 2025 was an expense of 46.4%, compared to an expense of 36.0% for the six months ended June 30, 2024. The primary driver of the change in the Company’s effective tax rate was attributable to the relative impact of stock-based compensation discrete tax items. Although discrete tax expense was lower in absolute terms in the current year period, it represented a larger proportion of pre-tax income due to lower overall earnings. As a result, the discrete items had a more significant effect on the effective tax rate, increasing it compared to the same prior year period. We recorded an income tax expense of $0.2 million and an income tax expense of $1.2 million for the six months ended June 30, 2025 and 2024, respectively. We recognize the financial statement benefit of a tax position only after determining that the relevant tax authority is more-likely-than-not to sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the condensed consolidated financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company currently is not under examination in any jurisdictions. On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted. Key income tax-related provisions of the OBBBA include the repeal of mandatory capitalization of research and development expenditures under Internal Revenue Code (IRC) Section 174 (reinstating full expensing beginning in 2025), extension of bonus depreciation, and revisions to international tax regimes. We are evaluating the financial implications of the OBBBA and will begin reflecting its effects in the third quarter of 2025. We currently expect the OBBBA to have a minimal impact on our effective tax rate and to favorably impact the timing of cash taxes. Based on our estimates and assumptions, we currently expect that, after taking into account the anticipated impacts of the OBBBA, our full-year 2025 cash tax benefit will be approximately $4.6 million. |