Income Taxes

3 Months Ended

Mar. 31, 2020

Income Tax Disclosure [Abstract]

INCOME TAXES

On March 27, 2020, the President of the United States signed into law the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The CARES Act, among other things, includes certain income tax provisions for individuals and corporations; however, these benefits do not impact the Company’s current tax provision.

We have elected to recognize the tax on the global intangible low-taxed income (GILTI) as a period expense in the period the tax is incurred and we have included a provisional estimate for GILTI in our estimated annual effective tax rate.

During the three months ended March 31, 2020, the Company’s effective tax rate of 26.5% was above the U.S. federal statutory rate of 21.0% primarily due to state taxes (2.2%), foreign withholding tax liability accrued associated with the future repatriation of certain current year foreign earnings (1.7%), certain other non-deductible items (1.4%), and adjustments to deferred tax liabilities (1.1%). These unfavorable items were partially offset by the U.S. research and development credit (1.3%).

During the three months ended March 31, 2019, the Company’s effective tax rate of 28.1% was above the U.S. federal statutory rate of 21.0% primarily due to unfavorable tax effects of foreign valuation allowances (4.0%), tax on GILTI (3.2%), state taxes (1.1%), and certain other non-deductible items (1.5%). These unfavorable items were partially offset by the U.S. research and development credit (1.9%).