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INCOME TAXES
 6 Months Ended
Jun. 30, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES
5. INCOME TAXES
Our provision for income taxes is calculated using an estimated annual effective tax rate (“AETR”), which is based upon projected annual income, including anticipated losses in certain jurisdictions, non-deductible expenses under applicable federal and local tax laws, statutory rates, and planned tax strategies across the jurisdictions in which we operate. Certain items that do not relate directly to ordinary income are excluded from the AETR and are recognized in the period in which they occur.
Our effective tax rate was 26.8% and 22.0% for the three months ended June 30, 2025 and June 30, 2024, respectively, and 35.5% and 35.2% for the six months ended June 30, 2025 and June 30, 2024, respectively.
The effective tax rate for the three months ended June 30, 2025 was generally consistent with the blended U.S. federal and state statutory tax rate, with no significant variances.
The effective tax rate for the three months ended June 30, 2024 differed from the blended U.S. federal and state statutory tax rate primarily due to discrete income tax adjustments. These included a $13 million decrease as a result of the expiration of statutes of limitation on certain unrecognized tax benefits, partially offset by a $4 million increase related to prior year true-up adjustments in non-U.S. jurisdictions.
The effective tax rate for the six months ended June 30, 2025 differed from the blended U.S. federal and state statutory tax rate primarily due to the effect of losses incurred in certain non-U.S. jurisdictions for which no tax benefit was recognized. Additionally, permanent differences between the book and tax treatment further contributed to the variance from the statutory rate.
The effective tax rate for the six months ended June 30, 2024 differed from the blended U.S. federal and state statutory tax rate primarily due to discrete income tax adjustments. These adjustments included a $20 million increase related to the removal of the permanent reinvestment assertion for certain non-U.S. entities and a $5 million increase from prior year true-up adjustments in non-U.S. jurisdictions. These impacts were partially offset by a $22 million decrease as a result of the expiration of statutes of limitation on certain unrecognized tax benefits.
Our income tax returns remain subject to examination by the relevant tax authorities. Certain returns are currently under audit in various jurisdictions for tax years 2007 through 2020. The amount of the unrecognized tax benefits may change within the next twelve months as a result of audits or resolution of audit-related matters.
Subsequent to the end of the second quarter of 2025, on July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law, making several provisions of the Tax Cuts and Jobs Act permanent. Under Accounting Standards Codification (“ASC”) 740, “Income Taxes,” the effects of changes in tax laws must be recognized in the period of enactment. We are currently evaluating the potential impact of OBBBA on our future financial statements, including deferred tax positions and the estimated annual effective tax rate. No adjustments have been made to the financial statements as of June 30, 2025, as a result of OBBBA.