v3.25.2
Income Taxes
 6 Months Ended
Jun. 30, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The provision for income taxes consists of the following:
 Three Months EndedSix Months Ended
 June 30,
2025		June 30,
2024		June 30,
2025		June 30,
2024
 (in thousands)
Current$12,417 $13,998 $9,632 $22,530 
Deferred(8,399)781 (2,423)41 
     Income tax provision$4,018 $14,779 $7,209 $22,571 
The provision for income taxes differs from the amount computed by applying the Federal statutory income tax rate before the provision for income taxes.
The reconciliation of the Federal statutory income tax rate to the effective income tax rate is as follows:
 Three Months EndedSix Months Ended
 June 30,
2025		June 30,
2024		June 30,
2025		June 30,
2024
Federal statutory rate21.0 %21.0 %21.0 %21.0 %
State income taxes, net of Federal benefit4.8 4.8 5.0 5.0 
Excess tax benefits related to share-based compensation (Note 14)
(9.5)(3.4)(17.3)(5.8)
Return to provision2.2 — 0.8 (0.1)
Non-deductible executive compensation3.9 1.5 5.9 1.3 
Research and development credits(4.0)(1.2)(3.0)(1.2)
Other2.2 (0.6)1.5 (0.4)
     Effective tax rate20.6 %22.1 %13.9 %19.8 %
The Company recorded an excess tax benefit of $1.9 million and $2.2 million for the three months ended June 30, 2025 and 2024, respectively, and $9.0 million and $6.7 million for the six months ended June 30, 2025 and 2024, respectively. The excess tax benefit is related to the timing of stock option exercises as a result of our high stock price during the six months ended June 30, 2025 and 2024.
In accordance with the 2017 Tax Cuts & Jobs Act, under Internal Revenue Code Section 162(m), the tax deduction for covered executives of public companies is limited to $1.0 million per individual. Because of the increase in our stock price and timing of executive stock option exercises this resulted in an increase to the income tax provision of $0.8 million and $1.0 million for the three months ended June 30, 2025 and 2024, respectively, and $3.1 million and $1.5 million for the six months ended June 30, 2025 and 2024, respectively.
We also earn research and development tax credits as defined under Section 41 of the Internal Revenue Code. To qualify for the research and development tax credits, we perform annual studies that identify, document, and support eligible expenses related to qualified research and development activities. Eligible expenses include but are not limited to supplies, materials, contractor expenses and internal employee wages.
In accordance with the 2017 Tax Cuts & Jobs Act, under Internal Revenue Code Section 174, research and development expenses (“R&D”) incurred after December 31, 2021, are required to be capitalized and amortized over five years. The amortization requirements for tax purposes is a mid-year convention, resulting in tax amortization of 10% in the year of acquisition, 20% in the following four years, and 10% in the final year.
The amount of income tax that we pay annually is dependent on various factors, including the timing of certain deductions. These deductions can vary from year to year and, consequently, the amount of income taxes paid in future years will vary from the amounts paid in prior years.
The Company's estimated annual 2025 effective tax rate, excluding discrete events, is approximately 24.5%. We file income tax returns in the U.S., state and foreign income tax jurisdictions. We are subject to U.S. income tax examinations for the tax years 2021 to present, and to non-U.S. income tax examinations for the tax years 2020 to present. In addition, we are subject to state and local income tax examinations for tax years 2020 to present. The Company continues to evaluate its need to file returns in various state jurisdictions. Any interest or penalties would be recognized as a component of income tax expense.
Subsequent effects on our financial statement related to the One Big Beautiful Bill Act effective July 4, 2025
On July 4, 2025, the President signed the One Big Beautiful Bill Act (“OBBBA”), which includes significant changes to corporate tax provisions and deductions. As the enactment occurred after the June 30, 2025, reporting date, the Company has not adjusted its current or deferred tax balances as of June 30, 2025. The Company is currently evaluating the impact of the legislation and will reflect any required adjustments in the third quarter ended September 30, 2025.
The OBBBA includes reinstatement of 100% bonus depreciation for qualifying property placed in service after January 19, 2025, which reverses the previously scheduled phase-down of the bonus depreciation deduction to 40% for 2025 under prior law. The Company expects the reinstatement to accelerate tax deductions for capital expenditures made in the second half of 2025. This is expected to increase the Company’s June 30, 2025, tax receivable and decrease our deferred tax assets by approximately $4.0 million.
The OBBBA also repealed the mandatory capitalization and amortization of domestic R&D expenses under former IRC Section 174. As a result, the Company will deduct all 2025 qualifying domestic R&D expenses as incurred. Additionally, the Company will elect to accelerate the deduction of all remaining unamortized domestic R&D expenses originally capitalized in tax years 2022 through 2024 ratably over two years starting in tax year 2025. The net deductions benefit is expected to increase the Company’s June 30, 2025, income tax receivable and decrease our deferred tax assets by approximately $10.7 million.