Income Taxes

6 Months Ended

Jun. 30, 2021

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 18 — Income Taxes

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

	Three Months Ended						Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2021			2020			2021			2020
Effective tax rate		245.6	%		17.6	%		9.3	%		27.1	%

Our effective income tax rate was 245.6% and 17.6% in the second quarters of 2021 and 2020, respectively. This increase is primarily attributed to a one-time settlement expense related to lump sum payments made for the CTS Corporation U.S. pension plan. The second quarter 2021 tax rate was higher than the U.S. statutory federal tax rate for the same reason noted above. The second quarter 2020 tax rate was lower than the U.S. statutory federal tax rate due to foreign earnings that are taxed at lower rates and a reduction in reserves related to uncertain tax positions.

Our effective income tax rate was 9.3% and 27.1% in the first half of 2021 and 2020, respectively. This decrease is primarily attributed to the change in mix of earnings by jurisdiction, a one-time settlement expense related to lump sum payments made for the CTS Corporation U.S. pension plan, and tax benefits recorded upon vesting of restricted stock units. The tax rate in the first half of 2021 was lower than the U.S. statutory federal tax rate for the same reason noted above. The tax rate in the first half 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 offset by a reduction in reserves related to uncertain tax positions.