Income Taxes

9 Months Ended

Oct. 03, 2021

Income Tax Disclosure [Abstract]

Income Taxes

9. INCOME TAXES

Our effective tax rate may vary from the U.S. federal statutory tax rate due to the change in the mix of earnings in tax jurisdictions with different statutory rates, benefits related to tax credits, and the tax impact of non-deductible expenses and other permanent differences between income before income taxes and taxable income.

The effective tax rates for Q3 2021 and YTD 2021 were 24.7% and 18.6%, respectively. The variance from the U.S. federal statutory tax rate of 21% in Q3 2021 was primarily attributable to discrete tax expense related to GRAIL Continuation Payments and prior year tax adjustments. Due to the acquisition of GRAIL, the tax treatment of the GRAIL Continuation Payments changed from what was recorded in prior quarters, which resulted in a discrete tax expense being recorded for Q3 2021. The variance from the U.S. federal statutory tax rate of 21% in Q3 2021 was also attributable to the mix of earnings in jurisdictions with lower statutory tax rates than the U.S. federal statutory tax rate, such as in Singapore and the United Kingdom.

In YTD 2021, the variance from the U.S. federal statutory tax rate of 21% was primarily attributable to the mix of earnings in jurisdictions with lower statutory tax rates than the U.S. federal statutory tax rate, such as in Singapore and the United Kingdom. This was partially offset by the discrete tax expense on certain foreign subsidiary earnings that are no longer indefinitely reinvested, and discrete tax expense due to prior year tax adjustments.