v3.25.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income before income tax provision included the following components:
 Year Ended December 31,
(in thousands)202420232022
Domestic$544,979 $458,581 $504,797 
Foreign173,059 133,557 70,518 
Total$718,038 $592,138 $575,315 

The provision for income taxes was composed of the following:
 Year Ended December 31,
(in thousands)202420232022
Current:
Federal$144,537 $115,942 $103,007 
State20,265 11,759 11,286 
Foreign57,947 55,332 68,028 
Deferred:
Federal(78,139)(79,251)(94,398)
State(6,318)(8,145)(9,647)
Foreign4,054 (3,911)(26,671)
Total$142,346 $91,726 $51,605 

The reconciliation of the U.S. federal statutory tax rate to the consolidated effective tax rate was as follows:
 Year Ended December 31,
 202420232022
Federal statutory tax rate21.0 %21.0 %21.0 %
Nondeductible expenses3.5 2.1 2.3 
State income taxes, net of federal benefit1.5 0.6 0.9 
Foreign rate differential0.7 0.4 — 
Stock-based compensation0.3 — (1.5)
U.S. federal tax (benefit) expense on foreign earnings0.1 (1.2)(2.4)
Benefit from tax planning and entity structuring activities— (0.3)(2.5)
Research and development credits(3.0)(3.2)(3.2)
Foreign-derived intangible income deduction(4.2)(4.1)(5.7)
Other(0.1)0.2 0.1 
19.8 %15.5 %9.0 %
The components of deferred tax assets and liabilities are as follows:
 December 31,
(in thousands)20242023
Deferred tax assets:
Research and experimentation capitalization$211,192 $148,355 
Uncertain tax positions55,583 52,685 
Net operating loss carryforwards31,304 34,907 
Stock-based compensation29,712 33,473 
Operating lease liabilities24,967 28,380 
Debt obligation basis difference20,289 30,289 
Employee benefits12,066 13,662 
Other13,459 9,752 
Valuation allowance(16,892)(17,608)
Total deferred tax assets381,680 333,895 
Deferred tax liabilities:
Other intangible assets(177,270)(202,404)
Operating lease right-of-use assets(23,407)(26,878)
Deferred revenue(11,367)(12,080)
Property and equipment(3,034)(3,607)
Other— — 
Total deferred tax liabilities(215,078)(244,969)
Net deferred tax assets$166,602 $88,926 
The net decrease in the valuation allowance was primarily due to $0.9 million of currency fluctuations on balances relating to foreign jurisdictions, partially offset by a $0.2 million increase in unrealizable tax assets. As of each reporting date, management considers new evidence, both positive and negative, that could affect the future realization of deferred tax assets. If management determines it is more likely than not that an asset, or a portion of an asset, will not be realized, a valuation allowance is recorded.
As of December 31, 2024, we had federal net operating loss carryforwards of $0.7 million, which are subject to limitations of their utilization and expire between 2036 - 2037. Deferred tax assets of $0.9 million have been recorded for state operating loss carryforwards. These losses expire between 2027 - 2042, and are subject to limitations on their utilization. We had total foreign net operating loss carryforwards of $122.3 million, of which $89.1 million are not currently subject to expiration dates. The remainder, $33.2 million, expires between 2030 - 2039. We had tax credit carryforwards of $8.5 million, of which $1.9 million are not currently subject to expiration dates and $6.6 million expire in various years between 2025 - 2044. Of these tax credit carryforwards, $0.7 million are subject to limitations on their utilization.
In general, it is our intention to permanently reinvest all earnings in excess of previously taxed amounts. Substantially all of the pre-2018 earnings of our non-U.S. subsidiaries were taxed through the transition tax and post-2018 current earnings are taxed as part of global intangible low-taxed income tax expense. These taxes increase our previously taxed earnings and allow for the repatriation of the majority of our foreign earnings without any residual U.S. federal tax. Unrecognized provisions for taxes on indefinitely reinvested undistributed earnings of foreign subsidiaries would not be significant.
The following is a reconciliation of the total amounts of unrecognized tax benefits:
 Year Ended December 31,
(in thousands)202420232022
Unrecognized tax benefit as of January 1$54,884 $45,772 $39,641 
Gross changes—acquisitions— — — 
Gross increases—tax positions in prior period146 — 403 
Gross decreases—tax positions in prior period(267)(1,782)(2,780)
Gross increases—tax positions in current period12,302 14,814 13,905 
Reductions due to a lapse of the applicable statute of limitations(2,998)(3,236)(3,743)
Changes due to currency fluctuation(6,516)(684)(1,654)
Settlements— — — 
Unrecognized tax benefit as of December 31$57,551 $54,884 $45,772 

We believe that it is reasonably possible that $32.2 million of uncertain tax positions included in the table above may be resolved within the next twelve months as a result of settlement with a taxing authority or a lapse of the statute of limitations. If the unrecognized tax benefit as of December 31, 2024 were to be recognized, a benefit of $13.0 million would impact the effective tax rate.
We recognize interest and penalties related to unrecognized tax benefits as income tax expense. We recorded penalty expense of $0.1 million, $0.7 million and $0.7 million for the years ended December 31, 2024, 2023 and 2022, respectively. We recorded interest income of $0.2 million for the year ended December 31, 2024, interest income of $0.3 million for the year ended December 31, 2023 and interest expense of $0.1 million for the year ended December 31, 2022. As of December 31, 2024, we accrued a liability for penalties of $8.8 million and interest of $2.3 million. As of December 31, 2023, we accrued a liability for penalties of $8.7 million and interest of $2.6 million.
The OECD has introduced a two-pillar approach to address the tax challenges arising from the digitalization of the economy. Pillar Two defines global minimum tax rules and includes a 15 percent minimum tax rate. We have not recorded any income tax provision related to Pillar Two for the year ended December 31, 2024 based on the laws currently enacted in the jurisdictions in which we operate.
We are subject to taxation in the United States and various states and foreign jurisdictions. In the United States, our only major tax jurisdiction, the 2017 - 2024 tax years are open to examination by the Internal Revenue Service.