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Income Taxes
 9 Months Ended
Sep. 30, 2021
Income Tax Disclosure [Abstract]  
Income Taxes

NOTE 18 — Income Taxes

The effective tax rates for the three and nine months ended September 30, 2021 and 2020 are as follows:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

September 30,

 

 

September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Effective tax rate

 

 

28.9

%

 

 

22.2

%

 

 

32.5

%

 

 

24.4

%

 

Our effective income tax rate was 28.9% and 22.2% in the third quarters of 2021 and 2020, respectively. This increase is primarily attributed to a one-time settlement expense related to the final annuity purchase made for the CTS Corporation U.S. pension plan. The third quarter 2021 tax rate was higher than the U.S. statutory federal tax rate for the same reason noted above. The third quarter 2020 tax rate was higher than the U.S. statutory federal tax rate due to foreign withholding taxes, state taxes, and foreign earnings that are taxed at higher rates.

 

 

Our effective income tax rate was 32.5% and 24.4% in the nine months ended September 30, 2021 and 2020, respectively. This increase is primarily attributed to the settlement expenses related to lump sum payments made for the CTS Corporation U.S. Pension Plan termination process in the second and third quarters of 2021. The tax rate in the first nine months of 2021 was higher than the U.S. statutory federal tax rate for the same reason noted above. The tax rate in the first nine months of 2020 was higher than the U.S. statutory federal tax rate primarily due to the establishment of valuation allowances on certain U.S. tax credits and the Company’s decision to no longer reinvest the earnings of its Taiwan subsidiary.