Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

14.INCOME TAXES

The items comprising income tax expense are as follows:

	Year Ended December 31,
	2024		2023		2022
Provision for current income taxes
Federal	$	103.8	$	94.1	$	81.3
State		37.4		31.9		30.1
Total provision for current income taxes		141.2		126.0		111.4
Provision for deferred income taxes
Federal		3.9		5.4		(2.8	)
State		1.9		0.2		(0.4	)
Total provision for deferred income taxes		5.8		5.6		(3.2	)
Total provision for income taxes	$	147.0	$	131.6	$	108.2

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

	Year Ended December 31,
	2024			2023			2022
Federal statutory tax rate		21	%		21	%		21	%
Increase (decrease) resulting from:
State income taxes, net of Federal income tax benefit		6	%		6	%		6	%
Nondeductible expenses		1	%		3	%		4	%
Research credit, Federal benefit		(1	%)		(3	%)		(2	%)
Stock-based compensation		(4	%)		0	%		(1	%)
Uncertain Tax Position		0	%		1	%		0	%
Effective income tax rate		23	%		28	%		28	%

Our effective income tax rate was 23% and 28% for the years ended December 31, 2024 and 2023.

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,
	2024			2023
Deferred income tax assets (liabilities):
Mark-to-market investments - OCI	$	0.2		$	0.3
Stock-based compensation		18.0			15.1
Investment in Paycom Payroll Holdings, LLC		(167.9	)		(159.3	)
Net operating losses		—			0.1
Noncurrent deferred income tax liabilities, net	$	(149.7	)	$	(143.8	)

At December 31, 2024, we did not have any net operating loss carryforwards for state income tax purposes to offset future state taxable income.

The following table presents a reconciliation of the total unrecognized tax benefits as of the years ended December 31, 2024, 2023 and 2022.

	Year Ended December 31,
	2024			2023		2022
Balance at January 1
Tax positions related to current year:	$	3.8		$	—	$	—
Additions		0.8			3.8		—
Reductions		(0.8	)		—		—
Balance at December 31	$	3.8		$	3.8	$	—

As of December 31, 2024, 2023 and 2022, there were $3.8 million, $3.8 million and $0.0 million, respectively, of unrecognized tax benefits that, if recognized, would affect the annual effective tax rate.

Where applicable, we classify income tax-related interest and penalties as interest expense and other expense, respectively. During the years ended December 31, 2024, 2023 and 2022, we recorded interest and penalties with regard to uncertain tax positions of $0.3 million, $0.8 million and $0.0 million, respectively.

We recognize tax benefits from an uncertain tax position only if it is more likely than not the tax position will be sustained on examination by taxing authorities based on the technical merits of the position. The tax benefits in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50 percent likelihood of being realized on settlement.

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 2021.