Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

Income Tax Provision

The income tax provision consists of the following:

(In millions)	For the Years Ended December 31,
	2022		2021		2020
Income before provision for income taxes:	$	711.7	$	1,260.9	$	549.5
Current provision for income taxes:
Federal	152.7		217.9		53.8
State	28.5		38.6		6.6
	181.2		256.5		60.4
Deferred provision for income taxes:
Federal	(10.8)		36.7		57.3
State	3.1		7.9		11.0
	(7.7)		44.6		68.3
Interest and penalties expense:
Interest	2.4		1.5		(0.2)
Penalties	—		—		—
	2.4		1.5		(0.2)
Provision for income taxes	$	175.9	$	302.6	$	128.5

Deferred Taxes

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities consist of the following:

(In millions)	As of December 31,
	2022		2021
Deferred tax assets:
Allowance for credit losses	$	693.5	$	721.8
Stock-based compensation	18.3		16.3
Deferred state net operating loss	4.7		2.1
Other, net	12.2		10.9
Total deferred tax assets	728.7		751.1
Deferred tax liabilities:
Valuation of Loans receivable	1,140.4		1,169.6
Deferred Loan origination costs	1.6		1.6
Other, net	13.4		15.1
Total deferred tax liabilities	1,155.4		1,186.3
Net deferred tax liability	$	426.7	$	435.2

The deferred state net operating loss tax asset arising from the operating loss carryforward for state income tax purposes is expected to expire at various times beginning in 2034, if not utilized. We do not anticipate expiration of the net operating loss carryforwards prior to their utilization.

Effective Income Tax Rate

A reconciliation of the U.S. federal statutory income tax rate to our effective income tax rate is as follows:

	For the Years Ended December 31,
	2022		2021		2020
U.S. federal statutory income tax rate	21.0	%	21.0	%	21.0	%
State and local income taxes	3.8	%	3.0	%	2.7	%
Excess tax benefits from stock-based compensation plans	-0.8	%	-0.3	%	-0.5	%
Other	0.7	%	0.3	%	0.2	%
Effective income tax rate	24.7	%	24.0	%	23.4	%

State and local income taxes

The increase in our state and local income tax rate from 2021 to 2022 was primarily due to changes in state and local tax laws that were enacted during the third quarter of 2022, which are expected to increase our long-term effective income tax rate by approximately 20 basis points. The enactment of these tax law changes increased our effective income tax rate by approximately 60 basis points basis points for the year ended December 31, 2022, of which 50 basis points related to the impact of tax law changes that are effective for future periods and 10 basis points related to the impact of tax law changes that were effective retroactively to the beginning of 2022.

The increase in our state and local income tax rate from 2020 to 2021 was primarily the result of the settlement of an uncertain tax position for state income taxes during 2020.

Excess tax benefits from stock-based compensation

We recognize an excess tax benefit or tax deficiency when the deduction for the stock-based compensation expense of a stock award for tax purposes differs from the cumulative stock-based compensation expense recognized in the financial statements. The excess tax benefit or tax deficiency is recognized in provision for income taxes in the period in which the amount of the deduction is determined, which is when restricted stock vests, restricted stock units are converted to common stock, or stock options are exercised. Excess tax benefits reduce our effective income tax rate, while tax deficiencies increase our effective income tax rate. The impact of excess tax benefits on our effective income tax rate for the year ended December 31, 2022 increased from the same period in 2021 primarily due to an increase in the number of restricted stock units that were converted to common stock during 2022 due to the timing of long-term stock award grants.

Other

Other items impacting our effective income tax rate primarily consist of non-deductible executive compensation expense. The impact of non-deductible executive compensation expense on our effective income tax rate for year ended December 31, 2022 increased in magnitude from the same period in 2021 primarily due to a decrease in pre-tax income.

Unrecognized Tax Benefits

The following table is a summary of changes in gross unrecognized tax benefits:

(In millions)	For the Years Ended December 31,
	2022		2021		2020
Unrecognized tax benefits at January 1,	$	49.4	$	41.8	$	41.7
Additions for tax positions of the current year	14.5		13.4		10.2
Additions for tax positions of prior years	—		0.9		0.1
Reductions for tax positions of prior years	—		—		—
Settlements	—		—		(4.6)
Reductions as a result of a lapse of the statute of limitations	(6.8)		(6.7)		(5.6)
Unrecognized tax benefits at December 31,	$	57.1	$	49.4	$	41.8

The total amount of gross unrecognized tax benefits that, if recognized, would favorably affect our effective income tax rate in future periods was $57.1 million as of December 31, 2022.  As of December 31, 2022, it is not possible to reasonably estimate the expected change to the total amount of unrecognized tax benefits in the next twelve months. Accrued interest related to uncertain tax positions was $13.2 million and $10.8 million as of December 31, 2022 and 2021, respectively.

We are subject to income tax in federal, state, and local jurisdictions. We are generally no longer subject to tax examinations on federal returns filed for years prior to 2019 and state and local returns filed for years prior to 2015.