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Income Taxes
 9 Months Ended
Sep. 30, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Our income tax expense and resulting effective tax rate are based upon the estimated annual effective tax rates applicable for the respective periods adjusted for the effect of items required to be treated as discrete in the interim periods. This estimated annual effective tax rate is affected by the relative proportions of revenue and income before taxes in the jurisdictions in which we operate. Based on the geographical mix of earnings, our annual effective tax rate fluctuates based on the portion of our profits earned in each jurisdiction.
The effective tax rates for the quarters ended September 30, 2025 and 2024 were 32.6% and 17.4%, respectively. The effective tax rate for the quarter ended September 30, 2025 is higher than the U.S. Federal tax rate primarily driven by higher tax rates in most foreign jurisdictions and state tax on domestic earnings, as well as unfavorable adjustments resulting from the
completion of the 2024 year-end U.S. Federal income tax return. The effective tax rate for the quarter ended September 30, 2024 is lower than the U.S. Federal tax rate primarily driven by favorable adjustments resulting from the completion of the 2023 year-end U.S. Federal income tax return.
The effective tax rates for the nine months ended September 30, 2025 and 2024 were 27.4% and 21.0%, respectively. The effective tax rate for the nine months ended September 30, 2025 is higher than the U.S. Federal tax rate primarily driven by higher tax rates in most foreign jurisdictions and state tax on domestic earnings, as well as unfavorable adjustments resulting from the completion of the 2024 year-end U.S. Federal income tax return. The effective tax rate for the nine months ended September 30, 2024 is consistent with the U.S. Federal tax rate as a result of higher tax rates in most foreign jurisdictions offset by the favorable adjustments resulting from the completion of the 2023 year-end U.S. Federal income tax return and an additional tax benefit related to share-based payment awards.
The Organization for Economic Co-operation and Development (the “OECD”) has introduced a framework to implement a global minimum corporate tax of 15%, referred to as Pillar Two, that is effective for tax years beginning in 2024. While it is uncertain whether the United States will enact legislation to adopt Pillar Two, certain countries in which we operate have adopted legislation to enact Pillar Two. The adoption of Pillar Two had no impact on our income tax expense for the nine months ended September 30, 2025 or the nine months ended September 30, 2024 and we expect there to be minimal impact, if any, in subsequent quarters.
On July 4, 2025, the U.S. enacted into law H.R. 1, “An Act to provide for reconciliation pursuant to title II of H. Con. Res. 14” (“The Act”), commonly referred to as “The One Big Beautiful Bill Act.” The Act contains several key tax provisions impacting businesses, including the permanent reinstatement of 100 percent bonus depreciation for qualified property and the restoration of immediate expensing of domestic research and experimental expenditures. The Act also modifies the business interest deduction limitation, as well as several core international tax provisions. The Company has recorded the impact of these tax law changes in the financial statements for the third quarter of 2025, which is the period of enactment. The impact on the effective tax rate in the current quarter was immaterial.