Income Taxes

9 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

We are subject to U.S. federal, state, and foreign income taxes. During the three and nine months ended September 30, 2022 and 2021, we recorded the following provisions for (benefits from) income taxes and effective tax rates as compared to our income before provision for income taxes:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in millions, except percentages)
Income before provision for income taxes	$	1,176.4	$	1,082.8	$	3,155.6	$	1,859.5
Provision for income taxes	245.9		230.9		652.5		287.5

Effective tax rate 21  % 21  % 21  % 15  %

Our effective tax rate for the three and nine months ended September 30, 2022, and the three months ended September 30, 2021, was similar to the U.S. statutory rate.

Our effective tax rate for the nine months ended September 30, 2021 was different than the U.S. statutory rate primarily due to a $99.7 million discrete tax benefit associated with an increase in the U.K.’s corporate tax rate from 19% to 25%, which was enacted in June 2021 and will become effective in April 2023.

We have reviewed the tax positions taken, or to be taken, in our tax returns for all tax years currently open to examination by a taxing authority. As of September 30, 2022 and December 31, 2021, we had $144.9 million and $129.5 million, respectively, of net unrecognized tax benefits, which would affect our tax rate if recognized.

Starting in 2022, our cash paid for income taxes is substantially increasing due to the elimination of the option in the U.S. to deduct research and development expenses in the period they are incurred and instead, as required by the Tax Cuts and Jobs Act of 2017, amortize them over a five year period if they are performed in the U.S. and fifteen years if they are performed in foreign jurisdictions.

In August 2022, the Inflation Reduction Act of 2022 (“IRA”) was enacted into law. The IRA includes a 15% corporate alternative minimum tax and a 1% excise tax on share repurchases. We do not expect the IRA to have a significant impact on our consolidated financial statements.

We file U.S. federal income tax returns and income tax returns in various state, local and foreign jurisdictions. We have various income tax audits ongoing at any time throughout the world. Except for jurisdictions where we have net operating losses or tax credit carryforwards, we are no longer subject to any tax assessment from tax authorities for years prior to 2018 in jurisdictions that have a material impact on our consolidated financial statements.