Income Taxes

9 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

For interim periods, we recognize income tax expense by applying the estimated annual effective income tax rate to year-to-date results unless this method does not result in a reliable estimate of year-to-date income tax expense. Each period, the income tax accrual is adjusted to the latest estimate, and the difference from the previously accrued year-to-date balance is adjusted in the current quarter. Changes in profitability estimates in various jurisdictions will impact our quarterly effective income tax rates.

The tax provision for income taxes from continuing operations for the nine months ended September 30, 2022 and 2021, reflected an estimated annual effective tax rate of 25% and 24%, respectively, excluding discrete items discussed below. The total effective tax rate for continuing operations for the three and nine months ended September 30, 2022, was 26% and 24%, compared to 25% and 24% for the comparable periods in 2021, respectively.

We recognized net discrete tax benefits of $9 million and $7 million in the nine months ended September 30, 2022 and 2021, respectively. The discrete tax benefits primarily relate to excess tax benefits from stock-based compensation and changes to estimates in the prior year including our deferred tax rate.