Income Taxes

6 Months Ended

Jun. 30, 2023

Income Taxes

Income Taxes

11. Income Taxes

The Company’s effective tax rate was (5)% and (3)% for the three and six month periods ended June 30, 2023, respectively. The Company’s effective tax rate was 19% and 19% for the three- and six-month periods ended June 30, 2022, respectively. The difference in the effective tax rate and the U.S. federal statutory rate was primarily due to the full valuation allowance the Company maintains against its deferred tax assets and state minimum taxes in the United States. The effective tax rate is calculated by dividing the Provision (benefit) for income taxes by the Loss before provision (benefit) for income taxes.

Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. Under existing income tax accounting standards such objective evidence is more heavily weighted in comparison to other subjective evidence such as our projections for future growth, tax planning and other tax strategies. The Company increased its valuation allowance approximately $238,000 during the six-month period ended June 30, 2023. There were no changes to the Company’s valuation allowance during the three month period ended June 30, 2023. In the future, changes in the Company’s valuation allowance may result from, among other things, additional pretax operating losses resulting in increases in its valuation allowance or pretax operating income resulting in decreases in its valuation allowance.