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INCOME TAX
 12 Months Ended
Aug. 31, 2026
Income Tax Disclosure [Abstract]  
INCOME TAX
NOTE 11. INCOME TAX

The components of earnings before income taxes were as follows:
Year Ended August 31,
(in thousands)202620252024
United States$682,285 $61,897 $631,592 
Foreign28,726 45,648 4,079 
Total$711,011 $107,545 $635,671 
The income taxes included in the consolidated statements of earnings were as follows:
Year Ended August 31,
(in thousands)202620252024
Current:
United States$(131,787)$83,897 $143,462 
Foreign5,623 8,371 163 
State and local21,295 20,669 18,035 
Current taxes(104,869)112,937 161,660 
Deferred:
United States152,389 (76,005)(8,075)
Foreign3,666 1,126 (7,684)
State and local3,976 (15,175)4,279 
Deferred taxes160,031 (90,054)(11,480)
Total income taxes$55,162 $22,883 $150,180 

A reconciliation of the federal statutory rate to the Company's effective income tax rate, including material items impacting the
effective income tax rate, is presented below:
Year Ended August 31, 2026
(in thousands)Amount Percent
U.S. federal statutory income tax rate$149,312 21.0 %
State and local income tax, net of federal income tax(1)
19,964 2.8 
Federal:
Tax credits
Energy tax credits - 48C advanced energy project credit(145,355)(20.4)
Other tax credits(264)— 
Nontaxable or non-deductible items:
Non-deductible compensation3,579 0.4 
Nontaxable gain(2,371)(0.3)
Other non-deductible items2,968 0.4 
Effect of cross-border tax laws1,842 0.3 
Changes in unrecognized tax benefits(10,914)(1.5)
Foreign tax effects:
Other foreign jurisdictions2,020 0.3 
Other:
IRC Section 50(c)(1) - basis adjustment30,525 4.3 
Withholding tax931 0.1 
Other miscellaneous2,925 0.4 
Total$55,162 7.8 %
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(1) State and local taxes in California, Illinois, Florida, Texas, New Jersey, Alabama, and Louisiana made up the majority of the effect in this category (greater than 50 percent).
Year Ended August 31,
(in thousands)20252024
Income tax expense at statutory rate$22,584$133,491
State and local taxes(1)
4,34117,629
Research and development credit(1)
(7,255)(1,151)
Foreign rate differential
(1,344)513
Interest expense related to uncertain tax positions
1,3142,154
Non-deductible compensation
1,3001,651
Nontaxable gain
(2,131)(1,786)
TCJA - Toll charge and related foreign tax credits
(2,766)—
Other6,840(2,321)
Income tax expense$22,883$150,180
Effective income tax rate21.3 %23.6 %
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(1) 2025 and 2024 include impacts of uncertain tax positions.

The Company plans to repatriate the current and future earnings from the Europe Steel Group segment and from certain immaterial foreign jurisdictions in the Construction Solutions Group segment and has recorded an immaterial amount of tax expense related to such earnings. The Company considers the undistributed earnings of the Europe Steel Group segment prior to August 31, 2019 and all other undistributed earnings of the Construction Solutions Group segment to be indefinitely reinvested and has not recorded deferred tax liabilities on such earnings.
Cash paid for income taxes, net of refunds received, by jurisdiction for the year ended August 31, 2026 is as follows:
Year Ended August 31,
(in thousands)2026
Federal$8,937 
State
California5,063 
Florida2,231 
Georgia2,470 
Illinois2,320 
New Jersey2,780 
Pennsylvania2,998 
Other States11,209 
Foreign
Poland3,619 
Other foreign jurisdictions1,328 
Cash paid for income taxes, net of refunds received$42,955 

The income tax effects of significant temporary differences giving rise to deferred tax assets and liabilities were as follows:
August 31,
(in thousands)20262025
Deferred tax assets:
Net operating losses and credits$268,647 $273,140 
Capitalized research and development26,823 53,651 
ROU operating lease liabilities54,276 41,352 
Deferred compensation and employee benefits37,521 33,905 
Reserves and other accrued expenses8,811 11,924 
Litigation-related reserve91,718 88,756 
Other12,351 7,300 
Total deferred tax assets500,147 510,028 
Valuation allowance for deferred tax assets(251,640)(253,196)
Deferred tax assets, net248,507 256,832 
Deferred tax liabilities:
Property, plant and equipment(490,361)(335,705)
Intangibles and goodwill(44,901)(44,696)
ROU operating lease assets(53,491)(40,922)
Derivatives(10,913)(11,889)
Other(2,325)(1,097)
Total deferred tax liabilities(601,991)(434,309)
Net deferred tax liabilities$(353,484)$(177,477)

Net operating losses giving rise to deferred tax assets consist of $313.7 million of state net operating losses and $899.3 million of foreign net operating losses that expire in varying amounts beginning in 2027 (with certain amounts having indefinite carryforward periods). These assets will be reduced as income tax expense is recognized in future periods.

The Company maintains a valuation allowance to reduce certain deferred tax assets to amounts that are more likely than not to be realized. The Company's valuation allowances primarily relate to net operating loss and credit carryforwards in certain state and foreign jurisdictions for which utilization is uncertain.
A reconciliation of the beginning and ending amounts of unrecognized income tax benefits is presented below:
(in thousands)202620252024
Balance at September 1,$44,235 $45,721 $44,165 
Change for tax positions of current year— — — 
Change for tax positions of prior years— 8,000 1,556 
Reductions due to lapse of statute of limitations(9,814)(9,486)— 
Balance at August 31,(1)
$34,421 $44,235 $45,721 
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(1) The full balance of unrecognized income tax benefits in each year, if recognized, would have impacted the Company’s effective income tax rate at the end of each respective year.

At August 31, 2026 and 2025, the Company had accrued interest and penalties related to uncertain tax positions of $4.4 million and $5.8 million, respectively.

During 2027, the Company anticipates the statute of limitations relating to positions of the Company in prior year income tax returns may lapse. As a result, it is reasonably possible that the amount of unrecognized tax benefits may decrease by $9.5 million.

The Company files income tax returns in the U.S. and multiple foreign jurisdictions with varying statutes of limitations. In the normal course of business, the Company and its subsidiaries are subject to examination by various taxing authorities. A summary of fiscal years open to examination is presented below.

U.S. Federal — 2023 and forward
U.S. States — 2022 and forward
Foreign — 2021 and forward

On January 10, 2025, the Company was awarded a Qualifying Advanced Energy Project Tax Credit in connection with the construction of the West Virginia micro mill under Section 48C of the Internal Revenue Code. The amount awarded is a nonrefundable transferable investment tax credit allocation equal to 30% of qualified expenditures for certified projects that meet prevailing wage and apprenticeship requirements. The Company elected to account for its nonrefundable transferable investment tax credits under ASC 740 using the flow-through method. Under the flow-through method, the credit is recognized in the fiscal year that the qualifying assets are placed in service. The Company intends to utilize the credit beginning with its 2026 tax return and has included the estimated impact in the financial statements beginning in 2026. Based on qualifying assets placed in service during the year ended August 31, 2026, the Company recognized an estimated gross federal tax credit of approximately $145.4 million. The recognition of the credit was partially offset by approximately $30.5 million of income tax expense associated with the reduction in the tax basis of qualifying property required by Section 50(c)(1) of the Internal Revenue Code. No corresponding impact was recognized in prior periods.

One Big Beautiful Bill Act

On July 4, 2025, the One Big Beautiful Bill Act (the "OBBBA") was enacted into law, introducing significant amendments to U.S. tax legislation with varying effective dates. Key provisions that impact CMC include the expansion of bonus depreciation, accelerated expensing of research and development costs and revisions to international tax regimes. CMC has incorporated these amendments into its fiscal 2026 tax provision, as applicable.

Income Tax Examination

The Company is subject to examination of certain income tax returns by the Internal Revenue Service ("IRS"). On March 3, 2026, the IRS notified the Company that the fiscal 2024 federal income tax return had been selected for examination. The audit commenced in May 2026. As of August 31, 2026, there were no known or estimable adjustments to the year's taxable income outside of positions previously reserved. As such, no additional reserves were recorded. The Company will continue to evaluate developments in the examination and adjust its reserves, if necessary, as additional information becomes available.