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INCOME TAXES
 9 Months Ended
Sep. 30, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES
NOTE 2—INCOME TAXES
At the end of each interim period, the Company estimates the annual effective income tax rate and applies that rate to its ordinary year-to-date income or loss. The income tax provision or benefit related to significant, unusual, or extraordinary items, if applicable, that will be separately reported or reported net of their related tax effects, is individually computed and recognized in the interim period in which it occurs. In addition, the effect of changes in enacted tax laws or rates, tax status, and judgment on the realizability of beginning-of-the-year deferred tax assets in future years or unrecognized tax benefits is recognized in the interim period in which the change occurs.
The computation of the estimated annual effective income tax rate at each interim period requires certain estimates and assumptions including, but not limited to, the expected pre-tax income (or loss) for the year, projections of the proportion of income (and/or loss) earned and taxed in foreign jurisdictions, permanent and temporary differences, and the likelihood of the realization of deferred tax assets generated in the current year. The accounting estimates used to compute the provision or benefit for income taxes may change as new events occur, more experience is acquired, additional information is obtained or our tax environment changes. To the extent that the estimated annual effective income tax rate changes during a quarter, the effect of the change on prior quarters is included in the income tax provision in the quarter in which the change occurs.
For the three months ended September 30, 2025, and 2024, the Company recorded an income tax provision of $32.9 million and $41.2 million, respectively. For the nine months ended September 30, 2025 and 2024, the Company recorded an income tax provision of $87.5 million and $113.5 million, respectively.
The effective tax rate for the three-month period in 2025 of 17% is lower than the statutory rate primarily due to changes in tax reserves. The effective tax rate for the nine-month period in 2025 of 18% is lower than the statutory rate primarily due to the lower tax rate on U.S. income derived from foreign sources and excess tax benefits generated by the exercise or vesting of stock-based awards, partially offset by nondeductible stock-based compensation and state income taxes.
The effective tax rates for both the three and nine-month periods in 2024, 23% and 22%, respectively, were higher than the statutory rate primarily due to nondeductible stock-based compensation, state income taxes, and foreign income taxed at higher rates, partially offset by the lower tax rate on U.S. income derived from foreign sources and research credits. The nine-month period in 2024 also included unfavorable tax adjustments upon the vesting of certain stock-based awards due to a higher stock price on the date such awards vested compared to the grant date fair value of such awards, partially offset by a tax benefit realized upon the conclusion of certain state income tax audits.
On July 4, 2025, the U.S. government enacted the One Big Beautiful Bill Act (“the Act”). The Act provides changes to U.S. federal tax law, including current expensing of U.S. research expenditures, immediate expensing of eligible capital expenditures, modifications to the limitation of business interest expense, and changes to other tax provisions impacting 2025 and later years. We expect the provisions of the Act to result in a reduction of 2025 and 2026 cash tax payments. Additionally, we expect that the 2025 effective tax rate will be negatively
affected by the passage of the Act, primarily due to a lower deduction for U.S. income derived from foreign sources as a result of the current expensing of U.S. research expenditures. We continue to monitor interpretive guidance related to the Act. The impacts of the legislation are reflected in the consolidated financial statements as of and for the period ended September 30, 2025.
Match Group is routinely under audit by federal, state, local, and foreign authorities in the area of income tax. These audits include a review of the timing and amount of income and deductions, and the allocation of such income and deductions among various tax jurisdictions. The Internal Revenue Service (“IRS”) has completed its audit of the Company’s federal income tax returns for years through December 31, 2019. Although the 2020 tax year is closed to assessment, adjustments to taxable income may still be made if it impacts net operating loss or credit carryforwards brought forward from that year. Returns filed in various other jurisdictions are open to examination for tax years beginning with 2015. Although we believe that we have adequately reserved for our uncertain tax positions, the final tax outcome of these matters may vary significantly from our estimates.
At September 30, 2025 and December 31, 2024, unrecognized tax benefits, including interest and penalties, were $50.2 million and $50.3 million, respectively. If unrecognized tax benefits at September 30, 2025 are subsequently recognized, income tax expense would be reduced by $45.3 million, net of related deferred tax assets and interest. The comparable amount as of December 31, 2024 was $46.6 million. The Company does not anticipate that the total unrecognized tax benefits will materially change over the next 12 months.
The Company recognizes interest and, if applicable, penalties related to unrecognized tax benefits in the income tax provision. Accruals of interest and penalties for the three months ended September 30, 2025 and 2024 were not material. At September 30, 2025, noncurrent income taxes payable includes accrued interest and penalties of $2.9 million. The comparable amount as of December 31, 2024 was $1.6 million.