v3.26.1
Income Taxes
 6 Months Ended
Jun. 30, 2026
Income Tax Disclosure [Abstract]  
Income Taxes

8. Income Taxes

The provision for income taxes is attributable to U.S federal, state, and foreign income taxes. The Company’s effective tax rate used for interim periods is based on an estimated annual effective tax rate and includes the tax effect of items required to be recorded discretely in the interim periods in which those items occur.

A reconciliation of the Company’s effective tax rate is as follows:

 

 

For the Three Months Ended

 

 

For the Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2026

 

 

2025

 

 

2026

 

 

2025

 

Estimated annual effective tax rate before discrete items

 

 

25.4

%

 

 

27.1

%

 

 

25.4

%

 

 

26.4

%

Discrete items recognized

 

 

(18.0

)%

 

 

(14.4

)%

 

 

(16.6

)%

 

 

(21.1

)%

Effective tax rate recognized in the statements of operations

 

 

7.4

%

 

 

12.7

%

 

 

8.8

%

 

 

5.3

%

During the three and six months ended June 30, 2026 and 2025, the Company’s effective tax rates were lower than the U.S. federal income tax rate, primarily due to excess tax benefits recognized on share-based compensation awards. Excess tax benefits totaled $16.9 million and $29.3 million for the three and six months ended June 30, 2026, respectively, compared to $1.4 million and $3.7 million for the three and six months ended June 30, 2025. These benefits are recognized as discrete tax items in the periods in which awards vest or are exercised and can vary significantly based on the Company’s stock price and employee activity. The favorable impact of these benefits was partially offset by permanent tax adjustments related to compensation that is nondeductible under Section 162(m) of the Internal Revenue Code.