v3.26.1
Income Taxes
 12 Months Ended
May 31, 2026
Income Tax Disclosure [Abstract]  
Income Taxes

Note L — Income Taxes

 

The components of deferred tax assets and liabilities are as follows:

 

 

 

May 31,

 

In millions

 

2026

 

 

2025

 

Deferred tax assets:

 

 

 

 

 

 

 

 

Compensation and employee benefit liabilities

 

$

 

71.5

 

 

$

 

69.2

 

Other current liabilities

 

 

 

27.2

 

 

 

 

15.8

 

Tax credit carry forward

 

 

 

0.8

 

 

 

 

10.4

 

Stock-based compensation

 

 

 

16.2

 

 

 

 

24.4

 

Unrealized losses on AFS securities

 

 

 

13.1

 

 

 

 

13.6

 

Capitalization of research and development

 

 

 

26.9

 

 

 

 

133.4

 

Leases

 

 

 

16.0

 

 

 

 

15.6

 

Net operating loss (“NOL”) carry forwards

 

 

 

15.9

 

 

 

 

28.9

 

Tax benefit of uncertain tax positions

 

 

 

20.4

 

 

 

 

18.3

 

Gross deferred tax assets

 

 

 

208.0

 

 

 

 

329.6

 

Deferred tax liabilities:

 

 

 

 

 

 

 

 

Deferred contract costs

 

 

 

173.3

 

 

 

 

149.7

 

Capitalized software

 

 

 

177.0

 

 

 

 

167.7

 

Goodwill, intangible assets, and fixed assets

 

 

 

374.4

 

 

 

 

431.8

 

Operating lease right-of-use assets

 

 

 

14.0

 

 

 

 

12.7

 

Other

 

 

 

6.7

 

 

 

 

6.6

 

Gross deferred tax liabilities

 

 

 

745.4

 

 

 

 

768.5

 

Net deferred tax liability

 

$

 

(537.4

)

 

$

 

(438.9

)

 

On July 4, 2025, the One Big Beautiful Bill Act ("The Act") was enacted into law. The most significant provisions applicable to the Company relate to accelerated tax deductions for qualified property and research expenditures as reflected in the deferred tax table above. There was no material impact on the Company's effective tax rate as a result of The Act.

 

The deferred tax asset related to NOL carry forwards is comprised of $2.1 million of federal NOL carry forwards, $8.4 million of state NOL carry forwards, and $5.4 million of foreign NOL carry forwards. The federal NOL carry forwards were acquired through various acquisitions. Certain federal NOL carry forwards have indefinite lives, while others expire between the fiscal years ending May 31, 2028 and May 31, 2037. The state NOL carry forwards expire between the fiscal years ending May 31, 2027 through May 31, 2045.

 

The components of the provision for income taxes are as follows:

 

 

 

Year ended May 31,

 

In millions

 

2026

 

 

2025

 

 

2024

 

Current:

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

$

 

324.4

 

 

$

 

418.8

 

 

$

 

433.5

 

State

 

 

 

122.9

 

 

 

 

118.4

 

 

 

 

117.4

 

Non-U.S.

 

 

 

(0.2

)

 

 

 

(2.8

)

 

 

 

6.5

 

Total current

 

 

 

447.1

 

 

 

 

534.4

 

 

 

 

557.4

 

Deferred:

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

 

 

101.4

 

 

 

 

(9.9

)

 

 

 

(18.6

)

State

 

 

 

2.3

 

 

 

 

(2.7

)

 

 

 

(4.6

)

Non-U.S.

 

 

 

0.0

 

 

 

 

(3.2

)

 

 

 

(6.6

)

Total deferred

 

 

 

103.7

 

 

 

 

(15.8

)

 

 

 

(29.8

)

Income taxes

 

$

 

550.8

 

 

$

 

518.6

 

 

$

 

527.6

 

 

A reconciliation of the U.S. federal statutory tax rate to the Company’s effective income tax rate is as follows:

 

 

 

 

 

 

 

Year ended May 31,

 

 

2026

 

2025 (2)

 

2024 (2)

dollars in millions

 

Amount

 

 

%

 

Amount

 

 

%

 

Amount

 

 

%

Federal statutory tax rate

 

$

 

485.3

 

 

 

21.0

 

%

 

$

 

456.9

 

 

 

21.0

 

%

 

$

 

465.8

 

 

 

21.0

 

%

Increase/(decrease) resulting from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

State income taxes, net of federal tax benefit (1)

 

 

 

98.5

 

 

 

4.3

 

%

 

 

 

92.2

 

 

 

4.2

 

%

 

 

 

91.2

 

 

 

4.1

 

%

Foreign tax effects

 

 

 

0.1

 

 

 

0.0

 

%

 

 

 

(0.7

)

 

 

0.0

 

%

 

 

 

0.2

 

 

 

0.0

 

%

Tax credits

 

 

 

(30.7

)

 

 

(1.3

)

%

 

 

 

(20.1

)

 

 

(0.9

)

%

 

 

 

(18.4

)

 

 

(0.9

)

%

Nontaxable or nondeductible items

 

 

 

(0.2

)

 

 

0.0

 

%

 

 

 

2.9

 

 

 

0.1

 

%

 

 

 

(8.7

)

 

 

(0.4

)

%

Changes in unrecognized tax benefits

 

 

 

(3.9

)

 

 

(0.2

)

%

 

 

 

(5.3

)

 

 

(0.2

)

%

 

 

 

(1.0

)

 

 

(0.0

)

%

Other adjustments

 

 

 

1.7

 

 

 

0.0

 

%

 

 

 

(7.3

)

 

 

(0.4

)

%

 

 

 

(1.5

)

 

 

(0.0

)

%

Effective income tax rate

 

$

 

550.8

 

 

 

23.8

 

%

 

$

 

518.6

 

 

 

23.8

 

%

 

$

 

527.6

 

 

 

23.8

 

%

 

(1)
State taxes in California, New York State, New York City, and New Jersey made up the majority (greater than 50%) of the tax effect in this category.
(2)
Disclosures for 2025 and 2024 were adjusted for retrospective application of ASU 2023-09. Refer to Note A for further information on the adoption of ASU 2023-09.

 

The effective income tax rates in all periods were impacted by recognition of net discrete tax benefits related to employee stock-based compensation payments.

 

The following is income taxes paid, net of refunds by significant jurisdiction:

 

 

 

Year ended May 31,

 

 

 

2026

 

 

2025

 

 

2024

 

Federal

 

$

 

205.0

 

 

$

 

406.0

 

 

$

 

439.0

 

State

 

 

 

 

 

 

 

 

 

 

 

 

California

 

 

 

26.3

 

 

 

*

 

 

 

*

 

Other

 

 

 

79.0

 

 

 

*

 

 

 

*

 

Total State

 

 

 

105.3

 

 

 

 

106.4

 

 

 

 

100.5

 

Foreign

 

 

*

 

 

 

*

 

 

 

*

 

Total income tax payments, net of refunds

 

$

 

310.3

 

 

$

 

512.4

 

 

 

 

539.5

 

 

* Jurisdiction below threshold for period presentation.

 

Uncertain income tax positions: The Company is subject to U.S. federal income tax, numerous local and state tax jurisdictions within the U.S., and taxes in the Company's foreign operations in Europe, Canada, India, and Israel. The Company maintains a reserve for uncertain tax positions. As of May 31, 2026, the reserve for uncertain tax positions, including interest and net of benefits, was $120.6 million, of which $120.1 million was included in long-term liabilities and $0.5 million was netted in the deferred tax on the Consolidated Balance Sheets. As of May 31, 2025, the total reserve for uncertain tax positions, including interest and net of federal benefits, was $108.6 million, of which $100.6 million was included in long-term liabilities and $8.0 million was netted in deferred tax on the Consolidated Balance Sheets.

 

A reconciliation of the beginning and ending amounts of the Company’s gross unrecognized tax benefits, not including interest or other potential offsetting effects, is as follows:

 

 

 

Year ended May 31,

 

In millions

 

2026

 

 

2025

 

 

2024

 

Balance as of beginning of fiscal year

 

$

 

106.0

 

 

$

 

87.2

 

 

$

 

72.0

 

Additions for tax positions of the current year

 

 

 

16.1

 

 

 

 

20.1

 

 

 

 

20.6

 

Additions for tax positions of prior years

 

 

 

1.2

 

 

 

 

9.8

 

 

 

 

0.8

 

Reductions for tax positions of prior years

 

 

 

(8.3

)

 

 

 

(5.5

)

 

 

 

(3.8

)

Settlements with tax authorities

 

 

 

—

 

 

 

 

(0.0

)

 

 

 

(0.3

)

Expiration of the statute of limitations

 

 

 

(3.6

)

 

 

 

(5.6

)

 

 

 

(2.1

)

Balance as of end of fiscal year

 

$

 

111.4

 

 

$

 

106.0

 

 

$

 

87.2

 

 

The reserve as of May 31, 2026 substantially relates to the Company’s uncertain tax positions for certain U.S. federal and state income tax matters. The Company believes the reserve for uncertain tax positions, including interest and net of federal benefits, of $120.6 million as of May 31, 2026 adequately covers open tax years and uncertain tax positions up to and including fiscal 2026 for major taxing jurisdictions. As of May 31, 2026 and 2025, the $120.1 million and $100.6 million, respectively, of unrecognized tax benefits, including interest and net of federal benefit, if recognized, would impact the Company’s effective income tax rate.

 

The Company has concluded all U.S. federal income tax matters through fiscal 2017. Fiscal years 2018, 2020, and 2023 are currently under audit by the IRS. With limited exception, state income tax audits by taxing authorities are closed through fiscal 2022, primarily due to expiration of the statute of limitations.

 

The Company continues to follow its policy of recognizing interest and penalties accrued on tax positions as a component of income taxes on the Consolidated Statements of Income and Comprehensive Income. The amount of accrued interest and penalties associated with the Company’s tax positions is immaterial to the Consolidated Balance Sheets. The amount of interest and penalties recognized for fiscal years 2026, 2025, and 2024 was immaterial to the Company’s results of operations.