Income Taxes

3 Months Ended

Mar. 31, 2023

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 three months ended March 31, 2023 and 2022, reflected an estimated annual effective tax rate of 28% and 24%, respectively, excluding discrete items

discussed below. The total effective tax rate for continuing operations for the three months ended March 31, 2023 was 5%, compared to 23% for the comparable period in 2022.

We recognized net discrete tax benefits of $5 million and $9 million in the three months ended March 31, 2023 and 2022, respectively. The discrete benefits primarily relate to excess tax benefits from stock-based compensation and inflationary adjustments.

On August 16, 2022, the Inflation Reduction Act of 2022 ("IRA") was signed into law. The IRA levies a 1% excise tax on net stock repurchases after December 31, 2022 and imposes a 15% corporate alternative minimum tax ("CAMT") for tax years beginning after December 31, 2022. The Company did not repurchase any shares during the three months ended March 31, 2023. CAMT is not expected to have a material impact on our results of operations or financial position.