Income Taxes

9 Months Ended

Sep. 30, 2024

Income Tax Disclosure [Abstract]

Income Taxes

7. Income Taxes

The Company recorded income tax expense of $56.6 million, or 23.8% of pre-tax income, for the three months ended September 30, 2024, compared to $55.3 million, or 22.9% of pre-tax income, for the three months ended September 30, 2023. Results for the three months ended September 30, 2024 were impacted by $1.5 million of net discrete tax benefits, including a $0.7 million benefit for the release of reserves as a result of the expiration of the statute of limitations. Results for the three months ended September 30, 2023 were impacted by $1.0 million of net discrete tax benefits.

The Company recorded income tax expense of $164.8 million, or 23.4% of pre-tax income, for the nine months ended September 30, 2024, compared to $145.8 million, or 24.2% of pre-tax income, for the nine months ended September 30, 2023. Results for the nine months ended September 30, 2024 were impacted by $5.7 million of net discrete tax benefits, including a $3.2 million benefit on the purchase of discounted federal tax credits and a $1.1 million benefit related to amended return interest income. Results for the nine months ended September 30, 2023 were impacted by $3.2 million of net discrete tax charges.

The Company’s liability for gross unrecognized tax benefits, excluding related interest and penalties, was $64.7 million and $64.3 million as of September 30, 2024 and December 31, 2023, respectively. As of September 30, 2024, net unrecognized tax benefits, excluding interest and penalties, of $51.0 million would affect the Company’s net income if recognized. During the next twelve months, it is reasonably possible that federal, state and foreign tax audit resolutions could reduce net unrecognized tax benefits by approximately $23.2 million because the Company’s tax positions are sustained on audit, the Company agrees to their disallowance or the statutes of limitations close.

The Company recognizes accrued interest and penalties, if any, related to unrecognized tax benefits in the “Provision for income taxes” in the Condensed Consolidated Statements of Income. During the nine months ended September 30, 2024 and 2023, the Company recognized expense of $3.0 million and $1.8 million, respectively, related to interest and penalties on

unrecognized tax benefits. At September 30, 2024, the Company had accruals for the payment of interest and penalties of $10.8 million.

Cash paid for income taxes, net of refunds disclosed on the Condensed Consolidated Statements of Cash Flows includes cash paid for the purchase of transferable tax credits during the nine months ended September 30, 2024 and 2023 of $65.4 million and $5.3 million, respectively.