12. Income Taxes

The components of income before income taxes consisted of the following:

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Components of the provision for income taxes were:

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The following table presents a reconciliation of the U.S. federal statutory income tax rate to the Company’s effective tax rate for the year ended June 30, 2026:

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Reconciliations of the federal statutory rate to the Company’s effective tax rate were as follows for the years ended June 30, 2025 and 2024:

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We record the GILTI aspects of comprehensive U.S. income tax legislation as a period expense. The provision for income taxes for the years ended June 30, 2026, 2025 and 2024, included $1,398, $3,198 and $2,003 of federal tax expense from the effects of GILTI, respectively.

The Company benefits from certain tax incentives in Israel, the impact of which are included within “Effect of Israel reduced rate” in the rate reconciliation table above for the year ending June 30, 2026 and “Taxes on non-U.S. income” in the rate reconciliation table above for the years ending June 30, 2025 and 2024.

The tax effects of significant temporary differences that comprise deferred tax assets and liabilities were:

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Deferred taxes are included in the consolidated balance sheets as follows:

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The valuation allowance established against deferred tax assets was:

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The Company records valuation allowances against certain foreign and state deferred tax assets when, after considering all of the available evidence, it is more likely than not that these assets will not be realized.

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The Company has $20,258 of state net operating loss carry forwards, of which $13,238 will expire in 2029 through 2045, and $6,930 that do not expire. States with net operating losses generally conform to federal limitations (i.e., post-2017, 80% of current taxable income with an unlimited carry forward period and pre-2018, 100% of current taxable income with 20-year carry forward period). The Company has $3,977 of foreign net operating loss carry forwards primarily in jurisdictions that have no expiration. Belgium has no limitation against the first EUR 1,000 of taxable income and 70% of the excess can be offset by net operating loss carry forwards.

If amounts are repatriated from certain of our foreign subsidiaries, we could be subject to additional non-U.S. income and withholding taxes. In connection with the Acquisition (see Note 3), we expect to repatriate approximately $5,000 of non-U.S. earnings, which will be subject to applicable non-U.S. withholding and related taxes. As of June 30, 2026, we recorded a liability of $250 related to undistributed earnings. We consider all other undistributed earnings of such foreign subsidiaries to be indefinitely reinvested. It is not practicable to estimate the additional deferred tax liability associated with the potential repatriation of the undistributed earnings. We do not provide income taxes for foreign currency translation adjustments relating to investments in international subsidiaries that will be held indefinitely.

Income taxes paid, net of refunds, for the year ended June 30, 2026 were as follows:

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Income taxes paid, net of refunds, for the years ended June 30, 2025 and 2024 were $13,400 and $15,430, respectively.

As tax law is complex and often subject to varied interpretations, it is uncertain whether some of our tax positions will be sustained upon examination. Tax liabilities associated with uncertain tax positions represent unrecognized tax benefits, which arise when the estimated benefit recorded in our financial statements differs from the amounts taken or expected to be taken in a tax return because of the uncertainties described above. Substantially all of these unrecognized tax benefits, if recognized, would reduce our effective income tax rate.

Reconciliations of the beginning and ending amounts of gross unrecognized tax benefits are as follows:

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We recognize interest and penalties associated with uncertain tax positions as a component of the provision for income taxes. We recognized and recorded interest and penalties expense of $672, $888 and $740 for 2026, 2025 and 2024, respectively.

Income tax returns for the following periods are no longer subject to examination by the relevant tax authorities:

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On July 4, 2025, the United States enacted “An Act to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14,” (“OBBBA”), also known as the “One Big Beautiful Bill Act.,” OBBBA made significant changes to the Internal Revenue Code, including the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions such as 100% bonus depreciation, domestic research cost expensing, and adjusting the business interest expense limitation.

OBBBA has multiple effective dates, with certain international tax provisions not impacting the Company until July 1, 2026. To date, the impact of this legislation was immaterial on our consolidated financial statements. The Company is currently evaluating the potential impact of this legislation on its future consolidated financial statements. Any material effects of OBBBA, including remeasurement of deferred tax assets and liabilities and changes to current and future tax expense, will be reflected in the period of enactment and in future periods as additional guidance is issued and the Company completes its analysis.