Company: ISRG
Filing Date: 2025-04-23
Form Type: 10-Q
Source: 0001035267-25-000109
Chunk: 104

Company: INTUITIVE SURGICAL INC
Filing Date: 2025-04-23
Form: 10-Q
Item: Item 2
Chunk 104
---
Income Tax Benefit

Income tax benefit for the three months ended March 31, 2025, was $35.2 million, or 5.3% of income before taxes, compared to $8.9 million, or 1.7% of income before taxes, for the three months ended March 31, 2024.

Our higher income tax benefit (lower effective tax rate) for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, was primarily due to higher excess tax benefits, as discussed below, higher federal research and development credit benefits, and lower U.S. taxes on foreign earnings.

Our provision for income taxes for the three months ended March 31, 2025, and 2024, included excess tax benefits associated with employee equity plans of $145.4 million and $111.1 million, respectively, which reduced our effective tax rate by 21.8 and 20.6 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.

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, including Switzerland and EU member states, have enacted or have announced plans to enact new tax laws to implement the global minimum tax. We considered the applicable tax law changes and additional guidance on Pillar Two implementation in the relevant countries, and there is no material impact to our tax provision for the three months ended March 31, 2025. We will continue to evaluate the impact of these tax law changes and additional guidance on future reporting periods.

We file federal, state, and foreign income tax returns in many jurisdictions in the U.S. and OUS. Years before 2017 are considered closed for significant jurisdictions. Certain of our unrecognized tax benefits could change due to activities of various 

40

tax authorities, including