Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 9 Income Taxes

Significant components of the provision for income taxes for the years ended December 31 are as follows:

(in millions)	2024			2023			2022
Current:
Federal	$	198		$	180		$	124
State		70			57			35
Foreign		19			23			2
Total current provision		287			260			161
Deferred:
Federal		14			26			39
State		4			6			8
Foreign		(4	)		(17	)		(4	)
Total deferred provision		14			15			43
Total tax provision	$	301		$	275		$	204

A reconciliation of the differences between the effective tax rate and the federal statutory tax rate for the years ended December 31 is as follows:

	2024			2023			2022
Federal statutory tax rate		21.0	%		21.0	%		21.0	%
State income taxes, net of federal income tax benefit		4.6			4.5			4.7
Non-deductible employee stock purchase plan expense		0.2			0.2			0.2
Non-deductible meals and entertainment		0.2			0.2			0.1
Non-deductible officers’ compensation		0.4			0.4			0.6
Tax benefit from stock-based compensation		(1.9	)		(1.6	)		(3.1	)
Effect of rates different than statutory		(1.1	)		—			—
Other, net		(0.3	)		(0.6	)		(0.2	)
Effective tax rate		23.1	%		24.1	%		23.3	%

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding amounts used for income tax reporting purposes.

Significant components of the Company’s net deferred tax liabilities as of December 31 are as follows:

(in millions)	2024			2023
Non-current deferred tax liabilities:
Intangible assets	$	808		$	701
Fixed assets		22			23
Right-of-use assets		41			43
Impact of adoption of ASC 606 revenue recognition		31			25
Total non-current deferred tax liabilities		902			792
Non-current deferred tax assets:
Deferred compensation		100			85
Accruals and reserves		34			19
Lease liabilities		49			50
Net operating loss carryforwards and other carryforwards		9			23
Valuation allowance for deferred tax assets		(1	)		(1	)
Total non-current deferred tax assets		191			176
Net non-current deferred tax liability	$	711		$	616

Income taxes paid in 2024, 2023 and 2022 were $304 million, $219 million and $125 million, respectively.

At December 31, 2024, for income tax reporting purposes, the Company had net operating loss carryforwards of $16 million for federal, no net operating loss carryforwards for international jurisdiction and $78 million net operating loss carryforwards for state, portions of which expire in the years 2025 and thereafter. The state carryforward amount is derived from the operating results of certain subsidiaries.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

(in millions)	2024			2023			2022
Unrecognized tax benefits balance at January 1	$	5		$	3		$	1
Gross increases for tax positions of prior years		3			3			2
Gross decreases for tax positions of prior years		—			—			—
Settlements		(4	)		(1	)		—
Unrecognized tax benefits balance at December 31	$	4		$	5		$	3

The Company does not expect its unrecognized tax benefits to change significantly over the next 12 months. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. Accrued interest and penalties related to uncertain tax positions were minimal.

The Company is subject to taxation in the United States and various state jurisdictions. The Company is also subject to taxation in various international jurisdictions throughout Europe and Asia. In the United States, federal returns for fiscal years 2021 through 2024 remain open and subject to examination by the Internal Revenue Service. The Company files and remits state income taxes in various states where the Company has determined it is required to file state income taxes. The Company’s filings with those states remain open for audit for the fiscal years 2021 through 2024. The Company files and remits income taxes in various international jurisdictions where the Company has determined it is required to file income taxes. The Company's filings with those countries remain open for audit for the fiscal years 2020 through 2024. The Company also operates in Bermuda and the Cayman Islands. The Company is not subject to any income taxes in these countries.

During 2023, the Company settled the previously disclosed State of Massachusetts income tax audit for the fiscal years 2015-2017, settled the previously disclosed State of Wisconsin audit for the fiscal years 2017-2020 and settled the previously disclosed State of Missouri audit for the fiscal years 2019-2021. There were no material adjustments as a result of the finalization of these audits. During 2023, the State of Michigan initiated an audit on the Company for the fiscal years 2018-2021, and the State of California initiated an audit for the fiscal years 2020-2021.

During 2024, the Company settled the State of Michigan income tax audit for the fiscal years 2018-2021, there was no material adjustments as a result of the finalization of the audit. Additionally, the State of Massachusetts proposed an adjustment on the previously disclosed State audit for the fiscal years 2018-2020. The Company is in the process of appealing the proposed adjustment, and no additional tax expense or liability is expected for this audit.

In general, it is our practice and intention to reinvest the earnings of our non-U.S. subsidiaries in those operations. The Company has determined it is not practical to determine the unrecognized deferred tax liabilities on the undistributed earnings from the Company’s international subsidiaries as such earnings are considered to be indefinitely reinvested.