Income Taxes |
6 Months Ended |
|---|---|
Mar. 31, 2026 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Income Taxes At the end of each interim period, we estimate a base effective tax rate that we expect for the full year based on our most recent forecast of pre-tax income, permanent book and tax differences, and global tax planning strategies. We use this base rate to provide for income taxes on a year-to-date basis, excluding the effect of significant unusual items and items that are reported net of their related tax effects in the period in which they occur. The effective tax rates were 20.2 percent and 16.5 percent for the three and six months ended March 31, 2026, respectively, compared to 17.1 percent and 16.8 percent for the three and six months ended March 31, 2025, respectively. The increase in the effective tax rate for the three months ended March 31, 2026 was primarily due to the application of Base Erosion and Profit Shifting (BEPS) Pillar Two minimum tax rules in Singapore. The effective tax rate was lower than the U.S. statutory rate of 21 percent for the three and six months ended March 31, 2026, primarily due to higher discrete tax benefits, including a tax benefit related to the dissolution of the Sensia joint venture, in the first quarter, and excess income tax benefits on share-based compensation. The effective tax rate was lower than the U.S. statutory rate of 21 percent in the three and six months ended March 31, 2025, primarily due to the geographical mix of pre-tax income. Our final payment of $97 million related to the U.S. transition tax under the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) was paid in the second quarter of 2026. There is no longer a balance related to this in Other current liabilities in the Consolidated Balance Sheet as of March 31, 2026. Unrecognized Tax Benefits The amount of gross unrecognized tax benefits was $28 million at March 31, 2026, and $29 million at September 30, 2025, respectively, of which the entire amount would reduce our effective tax rate if recognized. Accrued interest and penalties related to unrecognized tax benefits were $3 million at March 31, 2026 and $2 million at September 30, 2025. We recognize interest and penalties related to unrecognized tax benefits in the income tax provision. We believe it is reasonably possible that the amount of gross unrecognized tax benefits could be reduced by up to $22 million in the next 12 months as a result of the resolution of tax matters in various global jurisdictions and the lapses of statutes of limitations. If all of the unrecognized tax benefits were recognized, the net reduction to our income tax provision, including the recognition of interest and penalties and offsetting tax assets, could be up to $23 million. We conduct business globally and are routinely audited by the various tax jurisdictions in which we operate. We are no longer subject to U.S. federal income tax examinations for years before 2018, state and local income tax examinations for years before 2015, and foreign income tax examinations for years before 2008.
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