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Income Taxes
 6 Months Ended
Jun. 30, 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 20.9% in the second quarter and six months ended June 30, 2026, and 20.8% in the second quarter and six months ended June 30, 2025.
The 2026 rate was lower than the U.S. federal statutory rate of 21% primarily due to 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, partially offset by 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%. 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 is consistent with the 2025 rate.
For the second quarter of 2026 and 2025, the tax rate including discrete items was 17.7% and 13.2%, respectively. In the second quarter of 2026, the Company recorded a discrete net tax benefit of $20 attributable to a benefit to release a valuation allowance related to U.S. foreign tax credits of $22, a benefit to release a valuation allowance related to U.S. state tax losses of $10, a benefit to release a tax reserve in Germany of $3, and an excess tax benefit for stock compensation of $1, reduced by a charge to establish an international withholding tax reserve of $16. In the second quarter of 2025, the Company recorded a discrete net tax benefit of $35 attributable to benefits related to U.S. tax accounting method changes for the deduction of certain prior period transaction and other costs of $17, an excess benefit for stock compensation of $13, and a net benefit related to U.S. federal and state R&D credits claimed for prior years of $5.
For both the six months ended June 30, 2026 and June 30, 2025, the tax rate including discrete items was 17.9%. In the six months ended June 30, 2026, the Company recorded a discrete net tax benefit of $41 attributable to a benefit to release a valuation allowance related to U.S. foreign tax credits of $22, an excess tax benefit for stock compensation of $22, a benefit to release a valuation allowance related to U.S. state tax losses of $10, and a benefit to release a tax reserve in Germany of $3, reduced by a charge to establish an international withholding tax reserve of $16. In the six months ended June 30, 2025, the Company recorded a discrete net tax benefit of $26 attributable to benefits related to U.S. tax accounting method changes for the deduction of certain prior period transaction and other costs of $17, an excess benefit for stock compensation of $14, and a net benefit related to U.S. federal and state R&D credits claimed for prior years of $5, reduced by a net charge related to the expiration of a tax holiday in China of $6, a charge for a tax reserve established in Germany of $2, and a net charge for other small items of $2.
The tax provision was comprised of the following:
Second quarter endedSix months ended
June 30,June 30,
2026202520262025
Pre-tax income at estimated annual effective income tax rate before discrete items$135 $97 $284 $190 
Other discrete items(20)(35)(41)(26)
Provision for income taxes$115 $62 $243 $164