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Income Taxes
 9 Months Ended
Sep. 30, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The Company’s year-to-date tax provision is comprised of the most recent estimated annual effective tax rate applied to year-to-date, pre-tax ordinary income. The tax impacts of unusual or infrequently occurring items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, are recorded discretely in the interim period in which they occur. In addition, the tax provision is adjusted for the interim period impact of non-benefited, pre-tax losses.
The estimated annual effective tax rate, before discrete items, applied to ordinary income was 21.4% in both the third quarter and nine months ended September 30, 2025, and 20.9% in both the third quarter and nine months ended September 30, 2024.
The 2025 rate was higher than the U.S. federal statutory rate of 21% primarily due to incremental state income tax, additional U.S. tax on Global Intangible Low-Taxed Income (“GILTI”) and other foreign earnings, nondeductible expenses, and foreign earnings subject to tax in jurisdictions with tax rates higher than the U.S. federal statutory rate of 21%, partially offset by a U.S. deduction on Foreign Derived Intangible Income (“FDII”), a net benefit related to U.S. federal and state research and development (“R&D”) credits, and a U.S. tax benefit recognized for foreign tax credits. The 2024 rate was lower than the U.S. federal statutory rate of 21% primarily due to a net benefit related to U.S. federal and state R&D credits, a U.S. deduction on FDII, and a U.S. tax benefit recognized for foreign tax credits, partially offset by additional U.S. tax on GILTI, incremental state tax, nondeductible expenses, and foreign earnings subject to tax in jurisdictions with tax rates higher that the U.S. federal statutory rate of 21%. The 2025 rate was higher than the 2024 rate primarily due to higher state income taxes and non-deductible amounts in 2025 relative to increased profit before taxes.
For the third quarter of 2025 and 2024, the tax rate including discrete items was 22.2% and 6.2%, respectively. In the third quarter of 2025, the Company recorded a discrete net tax benefit of $1 for other small items. In the third quarter of 2024, the Company recorded a discrete net tax benefit of $46 primarily attributable to a $44 net benefit related to additional U.S. federal and state R&D credits claimed for prior years upon completion of the Company’s R&D study, the substantial portion of which are U.S. federal credits which have been approved under audit by the U.S. Internal Revenue Service, and a $2 excess tax benefit for stock compensation.
For the nine months ended September 30, 2025 and 2024, the tax rate including discrete items was 19.4% and 15.1%, respectively. In the nine months ended September 30, 2025, the Company recorded a discrete net tax benefit of $27 attributable to $17 in benefits related to U.S. tax accounting method changes for the deduction of certain prior period transaction and other costs, a $14 excess benefit for stock compensation, and a $5 net benefit related to U.S. federal and state R&D credits claimed for prior years, reduced by a $6 net charge related to the expiration of a tax holiday in China, a $2 charge for a tax reserve established in Germany, and a $1 net charge for other small items. In the nine months ended September 30, 2024, the Company recorded a discrete net tax benefit of $58 primarily attributable to a $44 net benefit related to additional U.S. federal and state R&D credits claimed for prior years upon completion of the Company’s R&D study, the substantial portion of which are U.S. federal credits which have been approved under audit by the U.S. Internal Revenue Service, a $9 excess tax benefit for stock compensation, a $6 benefit to release a valuation allowance related to U.S. foreign tax credits, and a net tax charge of $1 for other small items.
The One Big Beautiful Bill Act (“OBBB”), which was enacted on July 4, 2025, has not had a material impact on our estimated annual effective tax rate in 2025. Management continues to evaluate elections available under the OBBB which could impact the amount and timing of the Company’s U.S. tax deductions, as well as the recognition of its deferred tax assets and related valuation allowances.
The tax provision was comprised of the following:
Third quarter endedNine months ended
 September 30,September 30,
 2025202420252024
Pre-tax income at estimated annual effective income tax rate before discrete items$106 $74 $301 $207 
Impact of change in estimated annual effective tax rate on previous quarter’s pre-tax income5 (5)— — 
Interim period treatment of operational losses in foreign jurisdictions for which no tax benefit is recognized— (1)— 1 
Other discrete items(1)(46)(27)(58)
Provision for income taxes$110 $22 $274 $150