Income Taxes

3 Months Ended

Mar. 31, 2026

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company’s year-to-date tax provision is comprised of the most recent estimated annual effective tax rate applied to year-to-date, pre-tax ordinary income. The tax impacts of unusual or infrequently occurring items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, are recorded discretely in the interim period in which they occur. In addition, the tax provision is adjusted for the interim period impact of non-benefited, pre-tax losses.

The estimated annual effective tax rate, before discrete items, applied to ordinary income was 21.1% in the first quarter ended March 31, 2026, and 20.8% in the first quarter ended March 31, 2025.

The 2026 rate was higher than the U.S. federal statutory rate of 21% primarily due to incremental state income tax, nondeductible expenses, and foreign earnings subject to tax in jurisdictions with tax rates higher than the U.S. federal statutory rate of 21%, partially offset by a U.S. deduction on Foreign-Derived Deduction Eligible Income (“FDDEI”) formerly known as Foreign-Derived Intangible Income (“FDII”), and a net benefit related to U.S. federal and state research and development (“R&D”) credits. The 2025 rate was lower than the U.S. federal statutory rate of 21% primarily due to a U.S. deduction on FDII, a net benefit related to U.S. federal and state R&D credits, and a U.S. tax benefit recognized for foreign tax credits, partially offset by incremental state income tax, additional U.S. tax on Global Intangible Low-Taxed Income (“GILTI”) and other foreign earnings, nondeductible expenses, and foreign earnings subject to tax in jurisdictions with tax rates higher than the U.S. federal statutory rate of 21%. The 2026 rate was higher than the 2025 rate primarily due to increased state income tax and nondeductible expenses.

For the first quarter of 2026 and 2025, the tax rate including discrete items was 18.1% and 22.9%, respectively. In the first quarter of 2026, the Company recorded a discrete excess tax benefit of $21 for stock compensation. In the first quarter of 2025, the Company recorded a discrete net tax charge of $9 primarily attributable to a $6 net charge related to the expiration of a tax holiday in China, a $2 charge for a tax reserve established in Germany, and a net tax charge of $1 for other small items.

The tax provision was comprised of the following:

	First quarter ended
	March 31,
	2026		2025
Pre-tax income at estimated annual effective income tax rate before discrete items	$	149	$	93
Other discrete items	(21)		9
Provision for income taxes	$	128	$	102