INCOME TAXES

6 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

In connection with the Separation, the Company entered into a Tax Matters Agreement with Cummins that among other things, formalized our agreement related to the responsibility for historical tax positions for the period prior to the IPO for jurisdictions where our business was included in the consolidated or combined tax returns of Cummins.

Atmus’s effective tax rate for the three and six month periods ended June 30, 2023, was 24.5% and 24.1%, respectively. Atmus’s effective tax rate for the three and six month periods ended June 30, 2022, was 19.5%

and 20.8%, respectively. The increase in the effective tax rate was driven by a change in discrete tax items and in the mix of earnings among tax jurisdictions. The Company’s effective tax rate differs from the U.S. statutory rate primarily due to differences in rates applicable to foreign subsidiaries, withholding taxes, and state income taxes. The three and six month periods ended June 30, 2023 included unfavorable net discrete tax items related to return to provision adjustments.

Discrete items in the three months ended June 30, 2022, contained favorable net discrete tax items, primarily due to favorable changes in tax reserves. The six month period ended June 30, 2022, contained favorable net discrete tax items, primarily due to favorable changes in tax reserves, partially offset by unfavorable withholding tax adjustments and unfavorable changes for return to provision items.