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Income Taxes
 3 Months Ended
Mar. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes
13. Income Taxes
At the end of each interim reporting period, the Company determines the income tax provision by using an estimate of the annual effective tax rate, adjusted for discrete items occurring in the quarter. The effective income tax rate reflects the effect of federal, international, and state income taxes and the permanent impacts of differences in book and tax accounting.
The Company’s effective tax rate was 2.1% and (647.6)% for the three months ended March 31, 2024 and 2023, respectively. The increase in the effective tax rate is primarily due to near breakeven pre-tax income in the first quarter of 2023 of $0.5 million in relation to the tax benefit resulting from operating losses outside of the U.S.
Judgment is required in determining whether deferred tax assets will be realized in full or in part. Management assesses the available positive and negative evidence on a jurisdictional basis to estimate if deferred tax assets will be recognized and when it is more likely than not that all or some deferred tax assets will not be realized, and a valuation allowance must be established. As of March 31, 2024, the Company continues to maintain a valuation allowance against its U.S. federal and state net deferred tax assets.
The Company’s effective tax rate for the three months ended March 31, 2024 differed from the federal statutory tax rate of 21% in the U.S. primarily due to a valuation allowance recorded against U.S. federal and state net deferred tax assets.