v3.25.1
Income Taxes
 3 Months Ended
Apr. 30, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
We compute our provision for income taxes by applying the estimated annual effective tax rate to year-to-date ordinary income and adjust the provision for discrete tax items recorded in the period. In each quarter, we update the estimated annual effective tax rate and make a year-to-date adjustment to the provision.
The following table provides details of the provision for income taxes:
Three Months Ended April 30,
20252024
(in thousands, except percentages)
Income before provision for income taxes$315,765 $291,964 
Provision for income taxes61,162 75,656 
Effective tax rate19.4 %25.9 %
The year-over-year change in effective tax rate for the three months ended April 30, 2025 was due primarily to the changes in income before taxes and a decrease in net tax shortfalls and windfalls on stock-based compensation. For both the three months ended April 30, 2025 and April 30, 2024, the effective tax rate differed from the U.S. federal statutory rate due primarily to the foreign-derived intangible income deduction and research credits offset by tax shortfalls on stock-based compensation, state income taxes, and other compensation-related permanent differences.
As required by the 2017 Tax Cuts and Jobs Act, we started capitalizing research and development expenses incurred beginning in fiscal year 2023. These expenses are capitalized and amortized over five years for domestic research and fifteen years for international research. The mandatory capitalization requirement increases our cash tax liabilities but also decreases our effective tax rate due to increasing the foreign-derived intangible income deduction. The cash flow impact will decrease over time as capitalized research and development expenditures continue to amortize.