Company: ISRG
Filing Date: 2025-10-22
Form Type: 10-Q
Source: 0001035267-25-000209
Chunk: 126

Company: INTUITIVE SURGICAL INC
Filing Date: 2025-10-22
Form: 10-Q
Item: Item 2
Chunk 126
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 months ended September 30, 2024. Income tax expense for the nine months ended September 30, 2025, was $278.7 million, or 11.8% of income before taxes, compared to $214.5 million, or 11.5% of income before taxes, for the nine months ended September 30, 2024.

Our higher effective tax rate for the three and nine months ended September 30, 2025, compared to the three and nine months ended September 30, 2024, was primarily due to a lower tax rate benefit from excess tax benefits, as discussed below, and lower federal research and development credit benefits, partially offset by lower U.S. taxes on foreign earnings.

Our provision for income taxes for the three months ended September 30, 2025, and 2024, included excess tax benefits associated with employee equity plans of $24.2 million and $42.2 million, respectively, which reduced our effective tax rate by 2.8 and 6.3 percentage points, respectively. Our provision for income taxes for the nine months ended September 30, 2025, and 2024, included excess tax benefits associated with employee equity plans of $202.5 million and $189.0 million, respectively, which reduced our effective tax rate by 8.6 and 10.1 percentage points, respectively. The amount of excess tax benefits or deficiencies will fluctuate from period to period based on the price of our stock, the volume of share-based awards settled or vested, and the value assigned to employee equity awards under GAAP, which results in increased income tax expense volatility.

On July 4, 2025, the One Big Beautiful Bill Act (the “OBBB Act”) was enacted, introducing amendments to U.S. tax laws with various effective dates from 2025 to 2027. The changes introduced by the OBBB Act are not expected to have a material impact on our annual effective tax rate for 2025.

In 2021, the Organization for Economic Co-operation and Development (“OECD”) established an inclusive framework on base erosion and profit shifting and agreed on a two-pillar solution to global taxation, focusing on global profit allocation and a 15% global minimum effective tax rate (“Pillar Two”). The OECD issued Pillar Two model rules and continues to release guidance on these rules. In January 2025, the OECD released additional guidance, which includes a limitation on certain deferred