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Income Taxes
 6 Months Ended
Jun. 30, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Effective Tax Rates
Our quarterly provision for income taxes is measured using an annual effective tax rate, adjusted for discrete items within the periods presented.
Our effective tax rates are as follows:
Three Months Ended June 30, Six Months Ended June 30,
2025202420252024
Effective Tax Rate24.0%25.0%23.4%22.3%
The difference of our effective tax rate to the prior year comparable period for the three and six months ended June 30, 2025 and 2024 is primarily due to the mix of non-U.S. earnings.
Our effective tax rate for the three-and-six months ended June 30, 2025 is higher than the statutory U.S. federal tax rate of 21% primarily due to the mix of non-U.S. earnings.
On July 4, 2025, the H.R. 1 budget reconciliation bill was signed into law in the United States. The Company is currently evaluating the potential impact of this legislation on the income tax provision.
The Organization for Economic Co-operation and Development (“OECD”) has proposed a global minimum tax of 15% of reported profits (“Pillar 2”) that has been agreed upon by over 140 member jurisdictions including the United States. Pillar 2 addresses the risks associated with profit shifting to entities in low tax jurisdictions. We adopted Pillar 2 in 2024 and the anticipated impact of Pillar 2 on our income tax provision for the fiscal year ending December 31, 2025 is approximately $2.4 million.
As part of the Separation, we entered into a Tax Matters Agreement with SpinCo. The agreement, among other things, governs our and SpinCo’s respective rights, responsibilities and obligations after the Separation with respect to tax liabilities and benefits (including any taxes imposed that are attributable to the failure of the Distribution and certain related transactions to qualify as a transaction that is tax-free for U.S. federal income tax purposes), tax attributes, the preparation and filing of tax returns, the control of audits and other tax proceedings and other matters regarding taxes. Although enforceable as between the parties, the Tax Matters Agreement will not be binding on the Internal Revenue Service or other tax authorities.
As of June 30, 2025, we had gross unrecognized tax benefits of $9.3 million included in “Other liabilities” in our Unaudited Condensed Consolidated Balance Sheets.