Income Taxes |
9 Months Ended |
|---|---|
Sep. 30, 2026 | |
| Income Taxes | |
| Income Taxes | 7. Income Taxes. On July 4, 2025, the U.S. enacted a budget reconciliation package (known as the “One Big Beautiful Bill Act” or “OBBBA”) which includes a broad range of tax provisions affecting businesses. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. We have included the estimated impacts of the bill in the consolidated financial statements for the nine-month periods ended September 30, 2026 and 2025. We will continue to evaluate the full impact of these legislative changes as additional guidance and results become available. Our provision for income taxes for the three-month periods ended September 30, 2026 and 2025 was a tax expense of $13.5 million and $10.8 million, respectively, which resulted in an effective tax rate of 24.2% and 28.0%, respectively. Our provision for income taxes for the nine-month periods ended September 30, 2026 and 2025 was a tax expense of $38.5 million and $29.4 million, respectively, which resulted in an effective tax rate of 24.0% and 24.5%, respectively. The decrease in the effective income tax rate for the three and nine-month periods ended September 30, 2026, when compared to the prior-year periods, was primarily due to increased benefit from discrete items such as share-based compensation, and impacts from the enacted OBBBA tax law. The increase in income tax expense for the three and nine-month periods ended September 30, 2026, when compared to the prior-year periods, was primarily due to increased pre-tax book income. Our effective tax rate differs from the U.S. statutory rate primarily due to the impact of net controlled foreign corporation tested income and Subpart F inclusions, state income taxes, foreign taxes, other nondeductible permanent items and discrete items (such as share-based compensation). The Organization for Economic Cooperation and Development (“OECD”) Pillar Two global minimum tax rules, which generally provide for a minimum effective tax rate of 15%, are intended to apply for tax years beginning in 2024. On February 2, 2023, the OECD issued administrative guidance providing transition and safe harbor rules around the implementation of the Pillar Two global minimum tax, and on January 5, 2026, the OECD issued Side-by-Side guidance extending these safe harbor rules and exempting certain U.S. multinational enterprises from several top-up taxes under Pillar Two. The safe harbor transition period will apply to fiscal years beginning on or before December 31, 2027. We are closely monitoring developments and evaluating the impact these new rules are anticipated to have on our tax rate, including eligibility to qualify for these safe harbor rules. Based on year-to-date financial results and safe harbor rules, we currently do not anticipate the Pillar Two laws to have a material impact on our effective tax rate. |