Income Taxes

3 Months Ended

Mar. 31, 2026

Income Taxes

Income Taxes

12. Income Taxes

The Company applies an estimated annual effective rate to interim period pre-tax income to calculate the income tax provision for the quarter in accordance with the principal method prescribed by the accounting guidance established for computing income taxes in interim periods. The Company’s effective tax rates were 22.6% and 22.7% for the three months ended March 31, 2026 and 2025, respectively. During each of the three months ended March 31, 2026 and 2025, the effective tax rate was higher than the applicable statutory rate primarily due to the impact of nondeductible expenses, nondeductible compensation expense and other permanent adjustments, partially offset by investments in tax-exempt instruments.

On July 4, 2025, legislation referred to as “H.R. 1: One Big Beautiful Bill Act” (“OBBBA”) was signed into law which, among other changes, permanently disallowed certain business expenses, modified the tax year in which certain business deductions, primarily depreciation of capital asset additions, are allowed and thereby modified the time within which income tax payments will be made.