Company: ISRG
Filing Date: 2025-07-23
Form Type: 10-Q
Source: 0001035267-25-000192
Chunk: 127

Company: INTUITIVE SURGICAL INC
Filing Date: 2025-07-23
Form: 10-Q
Item: Item 2
Chunk 127
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 statutory rate, and lower federal research and development credit benefits, partially offset by lower U.S. taxes on foreign earnings.

Our lower effective tax rate for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, was primarily due to lower U.S. taxes on foreign earnings, partially offset by the effects of income earned by certain overseas entities being taxed at rates lower than the federal statutory rate.

Our provision for income taxes for the three months ended June 30, 2025, and 2024, included excess tax benefits associated with employee equity plans of $32.9 million and $35.7 million, respectively, which reduced our effective tax rate by 4.0 and 5.5 percentage points, respectively. Our provision for income taxes for the six months ended June 30, 2025, and 2024, included excess tax benefits associated with employee equity plans of $178.3 million and $146.8 million, respectively, which reduced our effective tax rate by 11.9 and 12.3 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. We are currently assessing the implications of these tax law changes and do not expect that they will have a material impact on our Financial Statements in the current year. Since the OBBB Act was enacted subsequent to our balance sheet date, our tax provision for the three and six months ended June 30, 2025, does not incorporate the effects of these tax law changes.

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 tax assets recognized after November 2021. Various countries,