Income Taxes

3 Months Ended

Mar. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company’s year-to-date tax provision is comprised of the most recent estimated annual effective tax rate applied to year-to-date pre-tax ordinary income. The tax impacts of unusual or infrequently occurring items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, are recorded discretely in the interim period in which they occur. In addition, the tax provision is adjusted for the interim period impact of non-benefited pre-tax losses.

The estimated annual effective tax rate, before discrete items, applied to ordinary income was 24.3% in the first quarter of 2022 and 30.4% in the first quarter of 2021. The 2022 and 2021 rates were higher than the U.S. federal statutory rate of 21% primarily due to additional estimated U.S. tax on Global Intangible Low-Taxed Income (“GILTI”) and other foreign earnings, incremental state tax and foreign taxes on earnings also subject to U.S. federal income tax, and nondeductible expenses.

For the first quarter of 2022 and 2021, the tax rate including discrete items was 23.4% and 29.2%, respectively. For the first quarter of 2022, the Company recorded a discrete net tax benefit of $2 for other items. For the first quarter of 2021, the Company recorded a discrete net tax benefit of $1 for other items.

The tax provision for the first quarter ended March 31, 2022 and 2021 was comprised of the following:

	First quarter ended
	March 31,
	2022		2021
Pre-tax income at estimated annual effective income tax rate before discrete items	$	42	$	34
Other discrete items	(2)		(1)
Provision for income taxes	$	40	$	33