Note 5 - Income Taxes |
9 Months Ended |
|---|---|
Mar. 31, 2026 | |
| Notes to Financial Statements | |
| Income Tax Disclosure [Text Block] |
Note 5. Income Taxes
Income tax expense was estimated at $863,000 and $2,499,000, and the effective tax rate was 22.3% and 24.0% for the three and nine months ended March 31, 2026. Estimated income tax expense for the three and nine months ended March 31, 2026, includes a discrete current tax benefit of $94,000 and $197,000, respectively, primarily related to the windfall tax benefit of vested stock awards, the exercise of stock options, and the true up for the prior year Federal R&D credit.
Income tax expense was estimated at $391,000 and $1,776,000, and the effective tax rate was 17.1% and 25.0% for the three and nine months ended March 31, 2025. Estimated income tax expense for the three and nine months ended March 31, 2025, includes a discrete current tax benefit of $338,000 and $478,000, respectively, primarily related to the exercise of stock options.
The Company is subject to U.S. federal and state income tax in multiple jurisdictions. With limited exceptions, years prior to the Company’s fiscal year ended June 30, , are no longer open to U.S. federal, state or local examinations by taxing authorities. The Company is not under any current income tax examinations by any federal, state or local taxing authority. If any issues addressed in the Company’s tax audits are resolved in a manner not consistent with management’s expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted into U.S. law. This legislation primarily modifies certain provisions of the 2017 Tax Cuts and Jobs Act. The Company has determined that the most significant impact of the OBBBA relates to the deductibility of U.S.-based research and experimental expenditures.
Under the new law, taxpayers may elect to either expense or amortize domestic research expenditures incurred in tax years beginning after December 31, 2024. Additionally, for expenditures incurred in prior years (i.e., after December 31, 2021, and before January 1, 2025), the legislation permits an election to accelerate the remaining deductions over either a one-year period (2026) or a two-year period (2026 and 2027).
The Company anticipates it will elect to accelerate the remaining deductions over a one-year period (2026). The expected reduction of cash paid for taxes is estimated to be approximately $428,000 in 2026. |