Income Tax Provision

3 Months Ended

Mar. 31, 2023

Income Tax Disclosure [Abstract]

Income Tax Provision

Income Tax Provision

We had an effective income tax rate of 19.9% for the three months ended March 31, 2023, compared to 22.3% for the three months ended March 31, 2022. The decrease in the effective tax rate for the three months ended March 31, 2023, as compared to the prior period, was principally driven by an increase in research tax credit benefits, offset by a decrease in excess tax benefits related to stock incentive awards and liabilities for uncertain tax positions.

The effective income tax rates for the periods presented were different from the statutory United States federal income tax rate of 21% primarily due to the tax benefits of research tax credits and excess tax benefits related to stock incentive awards, offset by state income taxes, liabilities for uncertain tax positions, and non-deductible expenses.

For tax years beginning on or after January 1, 2022, the Tax Cuts and Jobs Act of 2017 (“TCJA”) eliminates the option to currently deduct research and development expenses and requires taxpayers to capitalize and amortize them over five years for research activities performed in the United States and 15 years for research activities performed outside the United States pursuant to IRC Section 174. The requirement temporarily increases our U.S. federal and state cash tax payments and reduces cash flows in fiscal year 2023 and future years until the amortization deduction normalizes. Subsequent to March 31, 2023, we have paid approximately $66.9 million of income taxes related to Section 174.