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Income Taxes
 9 Months Ended
Sep. 30, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The Company adjusts its effective tax rate each quarter to be consistent with the estimated annual effective tax rate. The Company also records the tax effect of unusual or infrequently occurring discrete items.
The provision for income taxes is shown in the table below:
 Three Months Ended September 30, Nine Months Ended September 30,
 2025202420252024
Income taxes
$10,639 $15,483 $18,589 $39,710 
Income taxes on other income and expenses
1,960 1,939 5,415 4,566 
Income tax expense
$12,599 $17,422 $24,004 $44,276 
Income tax expense decreased $4.8 million and $20.3 million for the three and nine months ended September 30, 2025 as compared to the same periods in 2024. The decrease in income tax expense for the three months ended September 30, 2025 is primarily due to a decrease in the effective tax rate. The decrease in income tax expense for the nine months ended September 30, 2025 is primarily due to a decrease in pre-tax income, which resulted from the 2021 CA GRC decision in the first three months of 2024.
The Company’s effective tax rate was 17.1% and 20.6% before discrete items as of September 30, 2025 and September 30, 2024, respectively. The decrease in the effective tax rate was primarily due to the decrease in pre-tax income for the nine months ended September 30, 2025 as compared to the same period in 2024 as a result of the recognition of income related to the 2021 CA GRC decision in the first three months of 2024.
On July 4, 2025, the legislation formally titled “An Act to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14” (the Act) was signed into law. Aspects of the Act contain technical matters that require management to interpret the legislation and make judgments until further guidance becomes available. The legislation did not have a material impact on the Company’s income tax expense for the three months ended September 30, 2025, and the Company does not expect it to materially affect the Company’s effective income tax rate for 2025.
On June 27, 2024, California Senate Bill 167 (SB 167) was enacted into law. SB 167 provides for a three-year suspension of net operating losses under the California Corporation tax. Among other things, this new law temporarily disallows the use of state net operating losses for years beginning in 2024 through 2026.
The Company had unrecognized tax benefits of approximately $18.4 million and $17.3 million as of September 30, 2025 and 2024, respectively. Included in the balance of unrecognized tax benefits as of September 30, 2025 and 2024, is $4.2 million and $5.1 million, respectively, of tax benefits that, if recognized, would result in an increase to the Company’s effective tax rate. The Company does not expect its unrecognized tax benefits to change significantly within the next 12 months.