Income Taxes

6 Months Ended

Jun. 30, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Tax Rate

A reconciliation between the U.S. federal statutory tax rate and our effective tax rate is summarized as follows:

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2024		2023		2024		2023
Statutory rate	21.0	%	21.0	%	21.0	%	21.0	%
State taxes	1.4		1.2		1.4		1.2
Taxes on foreign earnings	(6.2)		(4.7)		(5.2)		(5.0)
Tax credits	(1.6)		(2.0)		(2.0)		(3.7)
Purchased inventory valuation step-up and intangible assets	1.6		0.3		1.5		0.3
GILTI	(0.9)		0.2		(1.6)		0.3
Other, including permanent items	1.2		0.2		0.9		0.3
Effective tax rate	16.5	%	16.2	%	16.0	%	14.4	%

Changes in Tax Rate

For the three and six months ended June 30, 2024, compared to the same periods in 2023, the changes in our effective tax rates include the impact of changes in jurisdictional profit mix, including non-cash tax effects of changes in the value of our equity investments.

The increase in our effective tax rate for the six months ended June 30, 2024, also reflects the resolution of an uncertain tax matter during the first quarter of 2023 related to tax credits.

Accounting for Uncertainty in Income Taxes

We and our subsidiaries are routinely examined by various taxing authorities. We file income tax returns in various U.S. states and in U.S. federal and other foreign jurisdictions. With few exceptions, we are no longer subject to U.S. federal tax examination for years before 2019 or state, local or non-U.S. income tax examinations for years before 2013.

The IRS and other national tax authorities routinely examine our intercompany transfer pricing with respect to intellectual property related transactions and it is possible that they may disagree with one or more positions we have taken with respect to such valuations.

It is reasonably possible that we will adjust the value of our uncertain tax positions related to certain transfer pricing, collaboration matters, withholding taxes and other issues as we receive additional information from various taxing authorities, including reaching settlements with such authorities.

We estimate that it is reasonably possible that our gross unrecognized tax benefits, exclusive of interest, could

decrease by up to approximately $25.0 million in the next 12 months as a result of various audit closures, settlements and expiration of the statute of limitations.