INCOME TAXES

3 Months Ended

Mar. 31, 2022

INCOME TAXES

INCOME TAXES

12. INCOME TAXES

The Company’s tax rate was 20.7% and 25.2% for the first quarter of 2022 and 2021, respectively. The change in the Company’s tax rate for the first quarter of 2022 compared to the first quarter of 2021 was driven primarily by the impact of discrete tax items and special (gains) and charges. Further information related to special (gains) and charges is included in Note 2.

The Company recognized net tax expenses related to discrete tax items of $1.0 million in the first quarter of 2022. This included share-based compensation excess tax benefits of $2.9 million. The amount of this tax benefit is subject to variation in stock price and award exercises. Additionally, the Company recognized discrete tax expense of $3.9 million primarily due to audit settlements, reserves for uncertain tax positions, prior year return adjustments, repricing of deferred tax balances, and other changes in estimates.

The Company recognized net tax expense related to discrete tax items of $16.1 million in the first quarter of 2021. This included a non-recurring, non-cash deferred tax charge of $25.1 million associated with transferring certain intangible property between affiliates. Share-based compensation excess tax benefit contributed $6.6 million in the first quarter of 2021. The remaining discrete net tax benefit of $2.4 million was due to other foreign and U.S. changes in estimates during the quarter.