Income Taxes

6 Months Ended

Jun. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The effective tax rate was 22.8 percent and 22.4 percent for the three months ended June 30, 2022 and 2021, respectively, and 22.7 percent and 23.9 percent for the six months ended June 30, 2022 and 2021, respectively. The increase in the effective tax rate for the three month period primarily reflected discrete tax benefits in the prior period. The decrease in the effective tax rate for the six month period primarily reflected discrete tax benefits in the current period related to the resolution of certain prior years' tax items and stock-based compensation. The effective tax rate for the prior six month period also reflected the prospective implementation of the Proportional Amortization Method to account for investments in qualified affordable housing projects.

We are under continuous examination by the Internal Revenue Service (IRS) and tax authorities in other countries and states in which we have significant business operations. The tax years under examination and open for examination vary by jurisdiction. We are currently under examination by the IRS for the 2017 and 2018 tax years.

We believe it is reasonably possible that our unrecognized tax benefits could decrease within the next twelve months by as much as $173 million, principally as a result of potential resolutions of prior years’ tax items with various taxing authorities. The prior years’ tax items include unrecognized tax benefits relating to the deductibility of certain expenses or losses and the attribution of taxable income to a particular jurisdiction or jurisdictions. Of the $173 million of unrecognized tax benefits, approximately $137 million relates to amounts that, if recognized, would impact the effective tax rate in a future period.