Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

14.INCOME TAXES

The items comprising income tax expense are as follows:

	Year Ended December 31,
	2022			2021		2020
Provision for current income taxes
Federal	$	81,348		$	17,557	$	14,680
State		30,051			9,539		6,422
Total provision for current income taxes		111,399			27,096		21,102
Provision for deferred income taxes
Federal		(2,823	)		26,579		15,204
State		(387	)		6,327		6,177
Total provision for deferred income taxes		(3,210	)		32,906		21,381
Total provision for income taxes	$	108,189		$	60,002	$	42,483

The following schedule reconciles the statutory Federal tax rate to the effective income tax rate:

	Year Ended December 31,
	2022			2021			2020
Federal statutory tax rate		21	%		21	%		21	%
Increase (decrease) resulting from:
State income taxes, net of Federal income tax benefit		6	%		8	%		8	%
Nondeductible expenses		4	%		6	%		6	%
Research credit, Federal benefit		(2	%)		(3	%)		(3	%)
Stock-based compensation		(1	%)		(7	%)		(9	%)
Remeasurement of state deferred tax liabilities		(0	%)		(2	%)		0	%
Effective income tax rate		28	%		23	%		23	%

Our effective income tax rate was 28% and 23% for the years ended December 31, 2022 and 2021, respectively. The higher effective income tax rate for the year ended December 31, 2022 primarily resulted from a decrease of excess tax benefits from shares that vested in 2022.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The significant components of our deferred tax assets and liabilities were as follows:

	December 31,
	2022			2021
Deferred income tax assets (liabilities):
Mark-to-market investments - OCI	$	1,260		$	—
Stock-based compensation		4,425			1,541
Investment in Paycom Payroll Holdings, LLC		(146,907	)		(147,659	)
Net operating losses		189			614
Noncurrent deferred income tax liabilities, net	$	(141,033	)	$	(145,504	)

At December 31, 2022, we had net operating loss carryforwards for state income tax purposes of approximately $0.2 million, which are available to offset future state taxable income that begin expiring in 2032.

At December 31, 2022 and 2021, we had no material unrecognized tax benefits related to uncertain tax positions.

We file income tax returns with the United States federal government and various state jurisdictions. With few exceptions, we are no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years prior to 2019.

On August 16, 2022, the Inflation Reduction Act of 2022 was signed into law, which, among other things, implements a 15% minimum tax on book income of certain large corporations, a 1% excise tax on net stock repurchases and several tax incentives to promote clean energy. Based on our current analysis of the provisions, we do not believe this legislation will have a material impact on our consolidated financial statements