SERVICE CORP INTERNATIONAL

PART II

4. Income Taxes

Income tax expense during interim periods is based on our estimated annual effective income tax rate plus any discrete items, which are recorded in the period in which they occur. Discrete items include, among others, events such as changes in estimates due to the finalization of tax returns, tax audit settlements, expiration of statutes of limitation, and increases or decreases in valuation allowances on deferred tax assets. Our effective tax rate was 26.1% and 22.9% for the three months ended March 31, 2025 and 2024, respectively. The effective tax rate was higher for the three months ended March 31, 2025 as excess tax benefits on the settlement of employee share-based awards for certain executives issued after the passage of the Tax Cuts and Jobs Act in 2017, which are now being settled, are not deductible. The effective tax rate for the three months ended March 31, 2025 was higher than the federal statutory tax rate of 21.0% primarily due to state and foreign tax expense.

The federal statutes of limitation have expired for all tax years prior to 2021, and we are not currently under audit by the IRS. Various state and foreign jurisdictions are auditing years 2020 through 2023.