INCOME TAXES

3 Months Ended

Mar. 31, 2023

INCOME TAXES

INCOME TAXES

12. INCOME TAXES

The Company’s tax rate was 18.0% and 20.7% for the first quarter of 2023 and 2022, respectively. The change in the Company’s tax rate for the first quarter of 2023 compared to the first quarter of 2022 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 benefits related to discrete tax items of $4.0 million in the first quarter of 2023 primarily due to changes in uncertain tax positions, prior year return adjustments, repricing of deferred tax balances, and other changes in estimates.

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, changes in uncertain tax positions, prior year return adjustments, repricing of deferred tax balances, and other changes in estimates.

The Inflation Reduction Act (IRA), which became effective January 1, 2023, includes a corporate alternative minimum tax on certain large corporations and climate change mitigation incentives. In addition, there are other non-income tax provisions, including an excise tax on the repurchase of corporate stock. The Company continues to assess the impact of the IRA but does not anticipate any material impacts on the Company’s financial statements.