XML 30 R17.htm IDEA: XBRL DOCUMENT v3.25.3
Income Taxes
 9 Months Ended
Sep. 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 September 30, Nine Months Ended September 30,
2025202420252024
Effective Tax Rate23.6%25.5%23.4%23.5%
The difference of our effective tax rate to the prior year comparable period for the three and nine months ended September 30, 2025 and 2024 is primarily due to the mix of non-U.S. earnings.
Our effective tax rate for the three-and-nine months ended September 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 U.S. government enacted The One Big Beautiful Bill Act of 2025 which includes, among other provisions, changes to the U.S. corporate income tax system including but not limited to the allowance of immediate expensing of qualifying research and development expenses and permanent extensions of certain provisions within the Tax Cuts and Jobs Act. Based on the Company’s initial evaluation of the provisions, the Company does not expect these tax law changes to have a material impact on the Company’s financial statements; however, the Company will continue to evaluate potential impacts in future periods based on its facts and circumstances and as further guidance becomes available.
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 September 30, 2025, we had gross unrecognized tax benefits of $9.6 million included in “Other liabilities” in our Unaudited Condensed Consolidated Balance Sheets.