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INCOME TAXES | 6 Months Ended
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Jun. 30, 2025
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The following table presents provision for income taxes (in thousands, except for effective tax rate):
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Income before provision for income taxes | $ | 31,596 |  |  | $ | 23,003 |  |  | $ | 58,769 |  |  | $ | 38,559 |
Provision for income taxes | 7,984 |  |  | 6,310 |  |  | 14,568 |  |  | 10,534 |
Effective tax rate | 25.3 | % |  | 27.4 | % |  | 24.8 | % |  | 27.3 | %
We are subject to income taxes in the U.S. and foreign jurisdictions. Significant judgment is required in determining our provision for income taxes and evaluating our uncertain tax positions. The effective tax rate decreased primarily due to a higher tax benefit from stock compensation vested during the period, a higher benefit from state income taxes, and higher tax benefits from research and development tax credits (R&D). These benefits were partially offset by recognition of uncertain tax positions related to R&D tax credits. While we believe that we have adequately provided for all uncertain tax positions, or tax positions where we believe it is not more-likely-than-not that the position will be sustained upon review, amounts asserted by tax authorities could be greater or less than our accrued position. Accordingly, our provisions on federal, state and foreign tax related matters to be recorded in the future may change as revised estimates are made or the underlying matters are settled or otherwise resolved with the respective tax authorities. On July 4th, 2025, the One Big Beautiful Bill Act (“OBBB”) was signed into law. The OBBB makes changes to U.S. tax law and includes provisions that beginning in January 2025, make permanent full expensing of tangible personal property, restores EBITDA-based calculations for purposes of the business interest deduction and allows for current expensing of R&D expenditures. ASC 740-10 requires the impact of changes to tax law to be recorded in the period of enactment, which will be reflected in our third quarter financial statements. We expect that OBBB will provide some reductions in cash taxes, however we do not anticipate the OBBB to materially impact income tax expense. Management will continue to monitor U.S. Treasury Department and IRS implementation of the OBBB and will apply applicable guidance and rulemaking as it becomes available. The Organization of Economic Cooperation and Development (“OECD”) continues to release additional guidance, including administrative guidance on how Pillar Two rules should be interpreted and applied by jurisdictions as they adopt Pillar Two. A number of countries have utilized the administrative guidance as a starting point for legislation that went into effect January 1, 2024. As of June 30, 2025, DXP anticipates the impact of Pillar Two to be immaterial to the Company based on current legislation that has been enacted to date.

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