Income Taxes

6 Months Ended

Jun. 26, 2022

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

The Company had income tax expense of $23.9 million and $25.0 million in the second quarter and first six months of 2022, respectively. The Company had income tax expense of $18.2 million and $27.7 million in the second quarter and first six months of 2021, respectively. The Company’s effective tax rates from continuing operations were 27.9% and 27.3% for the second quarter and first six months of 2022, respectively. The Company’s effective tax rates from continuing operations were 25.1% and 22.5% for the second quarter and first six months of 2021, respectively. The increase in income tax expense in the second quarter of 2022 was primarily due to higher income from continuing operations in the second quarter of 2022. The decrease in income tax expense in the first six months of 2022 was primarily due to lower income from continuing operations in the first six months of 2022. The increase in the effective tax rate in the first six months of 2022 was primarily due to a lower benefit in the first six months of 2022 from stock price appreciation on stock-based awards that settled in the respective six-month periods.

Beginning in 2022, the Tax Cuts and Jobs Act of 2017 eliminates the option to deduct research and development expenditures immediately in the year incurred and instead requires taxpayers to capitalize and amortize such expenditures over five years. Our cash tax payments have increased significantly this year as a result of the foregoing provision, and we expect our cash tax payments will continue to be elevated over the next few years if Congress does not repeal or defer the effective date of this provision. Also, our deferred tax assets will increase significantly as we begin to capitalize our research and development expenditures.