v3.26.1
Income Taxes
 3 Months Ended
Mar. 31, 2026
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The gross liability for unrecognized tax benefits at March 31, 2026 and December 31, 2025 was $14,214 and $13,613, respectively, exclusive of interest and penalties, of which $14,308 and $13,577 would affect the effective tax rate if the Company were to recognize the tax benefit.
The Company classifies interest and penalties on unrecognized tax benefits as income tax expense. As of March 31, 2026 and December 31, 2025, the combined amount of accrued interest and penalties related to tax positions taken on tax returns was $1,907 and $1,685, respectively.
March 31, 2026December 31, 2025
Gross liability for unrecognized tax benefits, exclusive of interest and penalties$14,214 $13,613 
Interest and penalties on unrecognized benefits1,907 1,685 
Total gross uncertain tax positions$16,121 $15,298 
Amount included in Current liabilities$4,057 $3,642 
Amount included in Other long-term liabilities12,064 11,656 
$16,121 $15,298 
The effective income tax rate for the three months ended March 31, 2026 and 2025 differs from the federal income tax statutory rate due to the following:
Three Months Ended March 31,
20262025
Statutory rate21.0 %21.0 %
State taxes, net of federal tax benefit2.9 2.9 
Foreign tax expense and tax rate differential(0.2)(0.2)
Tax benefit from stock option exercises(0.7)(0.5)
Other, net0.4 (0.4)
23.4 %22.8 %
The increase in the effective tax rate for the three months ended March 31, 2026 was primarily due to non-deductible executive compensation. Under Section 162(m) of the Internal Revenue Code, the Company's federal income tax deduction for compensation paid to certain covered employees is limited. Compensation expense that exceeds this limitation is not deductible for income tax purposes but is recognized as expense for financial reporting purposes. As a result, the Company incurred a permanent difference during the three months ended March 31, 2026, which increased the effective tax rate.
The Company files income tax returns in the United States on a consolidated basis and in many U.S. state and foreign jurisdictions. The Company is subject to examination of income tax returns by the Internal Revenue Service (IRS) and other domestic and foreign tax authorities. The Company is no longer subject to U.S. federal income tax examination for years before 2022 and is no longer subject to state, local or foreign income tax examinations by authorities for years before 2018.
The Company estimates it will recognize $4,057 of gross unrecognized tax benefits which is expected to be paid within one year or to be removed at the expiration of the statute of limitations and resolution of income tax audits and is netted against the current payable account. These unrecognized tax benefits are related to tax positions taken on certain federal, state, and foreign tax returns. However, the timing of the resolution of income tax examinations is highly uncertain, and the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ materially from the amounts accrued for each year. While it is reasonably possible that some issues under examination could be resolved in the next twelve months, based upon the current facts and circumstances, the Company cannot reasonably estimate the timing of such resolution or the total range of potential changes as it relates to the current unrecognized tax benefits that are recorded as part of the Company’s financial statements.