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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The federal and state and foreign income tax provision is summarized as follows: 
Year Ended December 31,202420232022
Current
Federal$138,970 $133,465 $126,780 
State26,536 23,621 27,267 
Foreign13,840 8,807 26,255 
179,346 165,893 180,302 
Deferred
Federal(8,558)(29,837)(40,619)
State(5,161)(3,620)(4,949)
Foreign(61)(39)(921)
(13,780)(33,496)(46,489)
Total income taxes$165,566 $132,397 $133,813 
Annual tax provisions include amounts considered sufficient to pay assessments that may result from examination of prior year tax returns; however, the amount ultimately paid upon resolution of issues raised may differ materially from the amount accrued. The examination and the resolution process may last longer than one year.
The components of Income before income taxes are summarized as follows:
Year Ended December 31,202420232022
Domestic$682,017 $545,642 $474,894 
Foreign64,740 49,013 134,386 
$746,757 $594,655 $609,280 
The Company's foreign income is primarily earned in Canada, the Republic of Ireland, Luxembourg and the United Kingdom.
The effective income tax rate differs from the federal income tax statutory rate due to the following:
Year Ended December 31,202420232022
Statutory rate21.0 %21.0 %21.0 %
State taxes, net of federal tax benefit2.1 2.6 2.9 
Foreign tax expense and tax rate differential0.2 (0.3)(0.2)
Tax benefit from stock option exercises(0.7)(0.3)(0.7)
Research and development tax credit(0.9)(1.1)(1.1)
Foreign-Derived Intangible Income Deduction (FDII)(0.2)(0.3)(0.3)
Other, net0.7 0.7 0.4 
22.2 %22.3 %22.0 %
Deferred income taxes for 2024 and 2023 reflect the impact of temporary differences between the amount of assets and liabilities for financial reporting purposes and such amounts as measured by tax laws and regulations. Significant components of deferred tax assets and liabilities at December 31, 2024 and 2023 are as follows:
20242023
Deferred Tax Assets:
Stock-based compensation expense$41,176 $35,999 
Federal net operating loss and R&D credit carryforward4,388 5,477 
State net operating loss carryforward 37,339 39,820 
Foreign net operating loss carryforward and other6,905 7,486 
Capitalized research and development18,650 11,759 
Accrued expense associated with voluntary separation program389 3,796 
Basis differences in investments7,079 5,111 
Federal benefit of state tax deduction for uncertain tax positions2,079 2,039 
Revenue and expense recognized in different periods for financial reporting and income tax purposes2,402 2,306 
Other assets
2,419 2,509 
Total deferred income tax assets122,826 116,302 
Less: Federal net operating loss and R&D valuation allowance(794)(794)
Less: State net operating loss valuation allowance(32,057)(36,966)
Less: Foreign net operating loss valuation allowance(6,905)(7,486)
Net deferred income tax assets$83,070 $71,056 
Deferred Tax Liabilities:
Difference in financial reporting and income tax depreciation methods$(6,237)$(9,679)
Difference between book and tax basis of other assets(8,316)(7,652)
Goodwill and other intangibles (6,263)(6,784)
Capitalized contract costs(10,270)(9,232)
Total deferred income tax liabilities$(31,086)$(33,347)
Net deferred income tax assets$51,984 $37,709 
The 2017 Tax Cut Job Act (Tax Act) enacted in December 2017 contained a provision which became effective for research and development expenditures incurred by the Company on or after January 1, 2022. Under the Tax Act, research and development costs incurred are no longer allowed as an immediate deduction for federal income tax purposes. Rather, these expenditures incurred must be capitalized and amortized over a five-year period for activities conducted in the United States or 15 years for activities conducted abroad. The Company recorded a deferred tax asset of $73,944 as of December 31, 2024 associated with this provision of the Tax Act which reduced the Company's net deferred tax liabilities related to capitalized research and development expenditures.
As of December 31, 2024, the Company has federal operating loss carryovers of $14,699 remaining from the acquisition of Novus Partners as well as research and development credit carryovers remaining of $1,302. The Company has recorded a deferred tax asset associated with these carryovers of $4,388 and a related valuation allowance of $794 associated with the statutory limitations of the carryforwards. Operating loss carryovers generated after December 31, 2017 have an indefinite carryforward period, while those generated before December 31, 2017 will expire beginning in 2033 through 2037.
The valuation allowances against deferred tax assets at December 31, 2024 and 2023 are related to federal and state net operating losses from certain domestic subsidiaries, foreign net operating losses from certain foreign subsidiaries and the restriction of the use of the foreign tax credits. Internal Revenue Code Section 382 places an annual limitation on the amount of operating losses and tax credits an acquiring entity can use of operating loss and tax credit carryforwards of acquired entities. Certain state and foreign tax statutes significantly limit the utilization of net operating losses for domestic and foreign subsidiaries. Furthermore, these net operating losses cannot be used to offset the net income of other subsidiaries.
The Company recognizes uncertain tax positions in accordance with the applicable accounting guidance and adjusts these liabilities when management’s judgment changes as a result of the evaluation of new information not previously
available. Due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the Company's current estimate of the tax liabilities. The Company’s total unrecognized tax benefit, including interest and penalties, as of December 31, 2024 was $16,966, of which $14,886 would affect the effective tax rate if the Company were to recognize the tax benefit. The gross amount of uncertain tax liability of $4,377 is expected to be paid within one year and is netted against the current payable account while the remaining amount of $12,589 is included in Other long-term liabilities on the accompanying Consolidated Balance Sheet. During the year ended December 31, 2024, the Company recognized $3,036 of previously unrecognized tax benefits relating to the lapse of the statute of limitation and settlements.
The Company files a consolidated federal income tax return and separate income tax returns with various states. Certain subsidiaries of the Company file tax returns in foreign jurisdictions. The Company is no longer subject to U.S. federal income tax examination for years before 2021 and is no longer subject to state, local or foreign income tax examinations by authorities for years before 2018.
A reconciliation of the beginning and ending amount of unrecognized tax benefit is as follows:
202420232022
Balance as of January 1$15,532 $15,204 $14,886 
Tax positions related to current year:
Gross additions3,460 3,395 3,481 
Tax positions related to prior years:
Gross additions106 120 251 
Settlements(491)— — 
Lapses on statute of limitations(3,366)(3,187)(3,414)
Balance as of December 31$15,241 $15,532 $15,204 
The above reconciliation of the gross unrecognized tax benefit will differ from the amount which would affect the effective tax rate because of the recognition of the federal and state tax benefits and interest and penalties.
The Company classifies all interest and penalties as income tax expense. The Company has recorded $1,725, $1,385 and $1,118 in liabilities for tax-related interest and penalties in 2024, 2023 and 2022, respectively.
The Company estimates it will recognize $4,377 of unrecognized tax benefits within the next twelve months due to lapses on the statute of limitation.
The Company includes its direct and indirect subsidiaries in its U.S. consolidated federal income tax return. The Company’s tax sharing allocation agreement provides that any subsidiary having taxable income will pay a tax liability equivalent to what that subsidiary would have paid if it filed a separate income tax return. If the separately calculated federal income tax provision for any subsidiary results in a tax loss, the current benefit resulting from such loss, to the extent utilizable on a separate return basis, is accrued and paid to that subsidiary.