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Income Taxes
 9 Months Ended
Sep. 30, 2021
Income Tax Disclosure [Abstract]  
Income Taxes
14.Income Taxes
The Company’s effective tax rate was 27.2 percent and 16.6 percent for the three and nine months ended September 30, 2021, respectively, as compared to (59.8) percent and 6.4 percent for the three and nine months ended September 30, 2020, respectively. Income tax expense is based on an estimated annual effective rate, which requires the Company to make its best estimate of annual pretax income or loss. The Company’s effective tax rates for the current year reflected the excess tax benefits arising from stock-based compensation and jurisdictional earnings mix. Effective tax rates were significantly lower in the prior year primarily due to the jurisdictional earnings mix and decrease in estimated income before income taxes with relatively significant non-deductible expenses, including the loss on the sale of WEX Latin America.
Undistributed earnings of certain foreign subsidiaries of the Company amounted to $116.5 million and $58.5 million at September 30, 2021 and December 31, 2020, respectively. The Company continues to maintain its indefinite reinvestment assertion for its investments in foreign subsidiaries except for any historical undistributed earnings and future earnings for WEX Australia. Upon distribution of these earnings in the form of dividends or otherwise, the Company would be subject to withholding taxes payable to foreign countries, where applicable, but would generally have no further federal income tax liability. It is not practicable to estimate the unrecognized deferred tax liability; however, it is not expected to be material.