Income Taxes

12 Months Ended

Dec. 31, 2023

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,
	2023		2022		2021
Income before provision for income taxes:	$	367.6	$	711.7	$	1,260.9
Current provision for income taxes:
Federal	97.1		152.7		217.9
State	20.2		28.5		38.6
	117.3		181.2		256.5
Deferred provision for income taxes:
Federal	(26.4)		(10.8)		36.7
State	(11.6)		3.1		7.9
	(38.0)		(7.7)		44.6
Interest and penalties expense:
Interest	2.2		2.4		1.5
Penalties	—		—		—
	2.2		2.4		1.5
Provision for income taxes	$	81.5	$	175.9	$	302.6

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,
	2023		2022
Deferred tax assets:
Allowance for credit losses	$	741.2	$	693.5
Stock-based compensation	14.6		18.3
Deferred state net operating loss	13.7		4.7
Other, net	14.1		12.2
Total deferred tax assets	783.6		728.7
Deferred tax liabilities:
Valuation of Loans receivable	1,158.9		1,140.4
Deferred Loan origination costs	1.6		1.6
Other, net	12.3		13.4
Total deferred tax liabilities	1,172.8		1,155.4
Net deferred tax liability	$	389.2	$	426.7

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,
	2023		2022		2021
U.S. federal statutory income tax rate	21.0	%	21.0	%	21.0	%
State and local income taxes	2.7	%	3.8	%	3.0	%
Non-deductible executive compensation expense	1.3	%	0.5	%	0.2	%
Excess tax benefits from stock-based compensation plans	-3.0	%	-0.8	%	-0.3	%
Other	0.2	%	0.2	%	0.1	%
Effective income tax rate	22.2	%	24.7	%	24.0	%

State and local income taxes

For the year ended December 31, 2023, the impact of state and local income taxes on our effective income tax rate decreased from 2022 primarily due to the settlement of an uncertain tax position for state income taxes during the second quarter of 2023.

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. The enactment of these tax law changes increased our effective income tax rate by approximately 60 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.

Non-deductible executive compensation expense

The impact of non-deductible executive compensation expense on our effective income tax rate for year ended December 31, 2023 increased in magnitude from the same period in 2022 primarily due to an increase in non-deductible executive compensation expense and a decrease in pre-tax income.

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, 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 2023 due to the timing of long-term stock award grants.

Unrecognized Tax Benefits

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

(In millions)	For the Years Ended December 31,
	2023		2022		2021
Unrecognized tax benefits at January 1,	$	57.1	$	49.4	$	41.8
Additions for tax positions of the current year	16.2		14.5		13.4
Additions for tax positions of prior years	—		—		0.9
Reductions for tax positions of prior years	(0.1)		—		—
Settlements	(3.7)		—		—
Reductions as a result of a lapse of the statute of limitations	(8.5)		(6.8)		(6.7)
Unrecognized tax benefits at December 31,	$	61.0	$	57.1	$	49.4

The total amount of gross unrecognized tax benefits that, if recognized, would favorably affect our effective income tax rate in future periods was $61.0 million as of December 31, 2023. As of December 31, 2023, 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 $15.1 million and $13.2 million as of December 31, 2023 and 2022, 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 2020 and state and local returns filed for years prior to 2017.