Income Tax Provision

9 Months Ended

Sep. 30, 2023

Income Tax Disclosure [Abstract]

Income Tax Provision

Income Tax Provision

We had an effective income tax rate of 20.2% and 17.3% for the three and nine months ended September 30, 2023, respectively, compared to negative 2.8% and 13.5% for the three and nine months ended September 30, 2022, respectively. The increase in the effective tax rate for the three and nine months ended September 30, 2023, as compared to the prior periods, was due to a favorable true-up adjustment associated with research tax credits recorded in the third quarter of 2022, offset by liabilities for uncertain tax positions, and a decrease in state income taxes and excess tax benefits related to stock incentive awards in the current year.

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 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 business 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.

We made income tax payments of $118.0 million and $35.3 million in the nine months ended September 30, 2023, and 2022, respectively.