XML 68 R17.htm IDEA: XBRL DOCUMENT v3.25.3
Income Taxes
 9 Months Ended
Sep. 30, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Our effective tax rate was 24% and 23% during the nine months ended September 30, 2025 and 2024, respectively, and 23% and 25% during the three months ended September 30, 2025 and 2024, respectively. The effective tax rate for the nine months ended September 30, 2025 was higher than the effective tax rate for the comparable period in 2024 primarily due to a deferred tax expense increase from state apportionment changes, partially offset by reductions of unrecognized tax benefits resulting from favorable audit settlements in the current period. The effective tax rate for the three months
ended September 30, 2025 was lower than the effective tax rate for the comparable period in 2024 primarily due to reductions of unrecognized tax benefits resulting from favorable audit settlements with certain taxing authorities, partially offset by a deferred tax expense increase from state apportionment changes in the current period.
Our unrecognized tax benefit as of September 30, 2025 was $233 million, a $41 million net decrease from the $274 million as of December 31, 2024. The net decrease includes a $15 million increase related to current year positions, a $2 million increase related to prior year positions, and a $58 million reduction related to prior year positions.
On July 4, 2025, the One Big Beautiful Bill Act, or OBBBA, was enacted into law. The OBBBA includes significant changes to U.S. federal and international tax provisions. The application of the OBBBA tax provisions did not result in material changes to our total effective tax rate for the nine and three months ended September 30, 2025. The composition of the income tax provision, however, reflects a decrease in current income tax expenses, offset by an increase in deferred income tax expenses, primarily resulting from timing differences between the recognition of expenses for financial reporting and income tax purposes. The decrease in current income tax expense is primarily due to immediate expensing of current year domestic research and development, or R&D, costs and certain capital expenditures, and an election to accelerate deductions of previously capitalized domestic R&D expenditures under the OBBBA. We intend to make certain elections under the OBBBA based on the best available information and have reflected the impact of these elections in our financial statements for the nine and three months ended September 30, 2025. We will continue to evaluate the impact of these and any alternative elections as additional information becomes available.
The Organisation for Economic Cooperation and Development, or OECD, Global Anti-Base Erosion Pillar Two minimum tax rules, or Pillar Two, which generally provide for a minimum effective tax rate of 15%, are intended to apply to tax years beginning in 2024. The EU member states and many other countries, including the U.K., our most significant non-U.S. jurisdiction, have committed to implement or have already enacted legislation adopting the Pillar Two rules. In July 2023, the U.K. enacted the U.K. Finance Act 2023, effective as of January 1, 2024, which included provisions to implement certain portions of the Pillar Two minimum tax rules and included an election to apply a transitional safe harbor to extend certain effective dates to accounting periods commencing on or before December 31, 2026 and ending on or before June 30, 2028. These Pillar Two rules, including those in the U.K., did not have a material impact on our financial statements as of September 30, 2025 or December 31, 2024.