Income Taxes

9 Months Ended

Sep. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

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

	For the Three Months Ended  September 30,				For the Nine Months Ended  September 30,
	2023		2022		2023		2022
U.S. federal statutory income tax rate	21.0	%	21.0	%	21.0	%	21.0	%
State and local income taxes	4.3	%	6.9	%	2.8	%	3.9	%
Excess tax benefits from stock-based compensation	—	%	—	%	-2.1	%	-0.1	%
Other	1.3	%	1.0	%	1.7	%	0.8	%
Effective income tax rate	26.6	%	28.9	%	23.4	%	25.6	%

State and local income taxes

For the three months ended September 30, 2023, the impact of state and local income taxes on our effective income tax rate decreased from the same period in 2022 primarily due to the greater impact of state and local tax law changes recorded in the prior period.

For the nine months ended September 30, 2023, the impact of state and local income taxes on our effective income tax rate decreased from the same period in 2022 primarily due to the settlement of an uncertain tax position for state income taxes during the second quarter of 2023.

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 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 nine months ended September 30, 2023 increased from the same period in 2022 primarily due to an increase in the number of restricted stock units that were converted to common stock during the first quarter of 2023 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 expense on our effective income tax rate for the three and nine months ended September 30, 2023 increased in magnitude from the same periods in 2022 due to an increase in non-deductible executive compensation and a decrease in pre-tax income.