INCOME TAXES

6 Months Ended

Jul. 01, 2023

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The following table summarizes our income tax expense and effective tax rate.

	Three Months Ended						Six Months Ended
	July 1, 2023			July 2, 2022			July 1, 2023			July 2, 2022
Income tax expense	$	30.6		$	24.0		$	50.7		$	43.5
Effective tax rate	21.9		%	24.0		%	19.5		%	22.3		%

The effective tax rate (ETR) for the three months ended July 1, 2023 was lower than the prior period primarily due to higher permanent tax benefits related to research and development incentives in both foreign and U.S. jurisdictions. For the six months ended July 1, 2023 the ETR was lower than the prior year as ITT recognized benefits of $16.3 from valuation allowance reversals on deferred tax assets in Germany. ITT also recognized tax benefits of $4.9 as a result of filing an amended 2017 consolidated federal tax return, which were partially offset by an expense of $14.1 relating to an Italian tax audit settlement covering tax years 2016-2022.

The Company operates in various tax jurisdictions and is subject to examination by tax authorities in these jurisdictions. The Company is currently under examination in several jurisdictions including China, Czechia, Germany, India, Italy, and the U.S. The estimated tax liability calculation for unrecognized tax benefits considers uncertainties in the application of complex tax laws and regulations in various tax jurisdictions. Due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the current estimate of the unrecognized tax benefit. Over the next 12 months, the net amount of the tax liability for unrecognized tax benefits in foreign and domestic jurisdictions could decrease by approximately $0.6 due to changes in audit status, expiration of statutes of limitations and other events.