v3.26.3
Income Taxes
 12 Months Ended
Aug. 31, 2026
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
We account for income taxes using the asset and liability approach as prescribed by ASC Topic 740, Income Taxes (“ASC 740”). This approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Using the enacted tax rates in effect for the year in which the differences are expected to reverse, deferred tax liabilities and assets are determined based on the differences between the financial reporting and the tax basis of an asset or liability.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted into law. The OBBBA makes permanent certain key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation for qualifying assets and expensing of domestic research costs. The legislation has multiple effective dates, with certain provisions effective for fiscal 2026 and others implemented through fiscal 2027. The legislation did not have a material impact on the Company's 2026 effective tax rate but did result in lower cash tax payments in 2026. The Company continues to review the OBBBA tax provisions to assess future impacts on the consolidated financial statements.
The following table presents income before income taxes for our domestic and foreign operations based on tax jurisdictions before intercompany eliminations for the periods presented (in millions):
Year Ended August 31,
202620252024
Domestic$499.8 $414.8 $472.4 
International180.9 85.4 76.2 
Income before income taxes$680.7 $500.2 $548.6 
The provision for income taxes consists of the following components during the periods presented (in millions):
Year Ended August 31,
202620252024
Current:
Federal$51.4 $103.2 $113.6 
State24.9 23.8 26.6 
Foreign39.7 21.6 19.4 
Total current116.0 148.6 159.6 
Deferred:
Federal36.4 (37.0)(30.7)
State1.1 (4.0)(1.3)
Foreign(4.1)(4.0)(1.6)
Total deferred33.4 (45.0)(33.6)
Total provision for income taxes$149.4 $103.6 $126.0 
The following table reconciles the U.S. statutory rate to the effective income tax rate on a continuing basis for the year ended August 31, 2026, in accordance with ASU 2023-09, which was adopted prospectively (in millions):
Year Ended August 31, 2026
Tax EffectRate Impact
U.S. federal statutory rate provision$142.9 21.0 %
State and local income taxes, net of federal income tax effects(1)
20.7 3.0 %
Foreign tax effects:
Ireland(9.3)(1.3)%
Other0.1 – %
Tax credits:
Research and development tax credits(11.1)(1.6)%
Changes in unrecognized tax benefits0.2 – %
Other adjustments
Tax gain of sale of assets10.4 1.5 %
Other(4.5)(0.7)%
Effective income tax rate$149.4 21.9 %
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(1) State taxes in California, Illinois, Pennsylvania, Texas, New Jersey, Florida, and Minnesota made up the majority of the tax effects in this category.
The following table reconciles the provision at the federal statutory rate to the total provision for income taxes prior to the adoption of ASU 2023-09 during the periods presented (in millions):
Year Ended August 31,
20252024
Federal income tax computed at statutory rate$105.0 $115.2 
State income tax, net of federal income tax benefit14.8 19.7 
Federal permanent differences(2.2)2.1 
Foreign permanent differences and rate differential4.2 2.3 
Research and development tax credits(13.7)(10.1)
Unrecognized tax benefits(4.8)2.0 
Other, net0.3 (5.2)
Total provision for income taxes$103.6 $126.0 
Components of the net deferred income tax liabilities as of the dates presented include (in millions):
August 31,
20262025
Deferred income tax liabilities:
Depreciation$(24.8)$(24.7)
Goodwill and intangibles(150.8)(155.1)
Operating lease right of use assets(19.7)(24.0)
Other liabilities(3.5)(3.2)
Total deferred income tax liabilities(198.8)(207.0)
Deferred income tax assets:
Self-insurance2.2 1.8 
Pension7.1 7.1 
Deferred compensation25.4 25.1 
Net operating losses7.7 6.8 
Other accruals not yet deductible37.4 37.0 
Operating lease liabilities22.4 26.4 
Capitalized research and development57.3 98.1 
Other assets26.0 22.7 
Total deferred income tax assets185.5 225.0 
Valuation allowance(21.2)(19.5)
Net deferred income tax liabilities$(34.5)$(1.5)
Income taxes paid, net of refunds by jurisdiction pursuant to the disclosure requirements of ASU 2023-09 for the year ended August 31, 2026 are as follows (in millions):
Year Ended August 31, 2026
Federal$52.3 
State22.9 
Non-US:
Canada16.6 
Mexico7.5 
Other non-US8.3 
Income taxes paid$107.6 
Income taxes paid, net of refunds, were $151.8 million and $155.7 million for the years ended August 31, 2025 and August 31, 2024, respectively.
As of August 31, 2026, we have recorded a deferred income tax liability of $0.4 million for certain foreign withholding taxes and U.S. taxes related to foreign earnings for which we do not assert indefinite reinvestment. With respect to unremitted earnings and original investments in foreign subsidiaries where we are continuing to assert indefinite reinvestment, any future remittances could be subject to additional foreign withholding taxes, U.S. state taxes, and certain tax impacts relating to foreign currency exchange effects. It is not practicable to estimate the amount of any unrecognized tax effects on these reinvested earnings and original investments in foreign subsidiaries. We account for the tax on Global Intangible Low-Taxed Income (“GILTI”) as a period cost and, therefore, do not record deferred taxes related to GILTI on our foreign subsidiaries.
At August 31, 2026, we had federal tax credit carryforwards of approximately $14.7 million that begin to expire in 2029, and state tax credit carryforwards of approximately $0.3 million that begin to expire in 2027. Approximately $14.7 million in federal tax credit carryforwards are subject to a full valuation allowance as we do not expect to realize any future tax benefit. At August 31, 2026, we had federal net operating loss carryforwards of $7.7 million that begin to expire in 2029, state net operating loss carryforwards of $27.9 million that begin to expire in 2033, and foreign net operating loss carryforwards of $18.6 million that begin to expire in 2028.
The gross amount of unrecognized tax benefits as of August 31, 2026 and 2025 totaled $18.7 million and $18.5 million, respectively. The amount of unrecognized tax benefits that would affect our effective income tax rate was $18.7 million and $18.5 million as of August 31, 2026 and 2025, respectively. We recognize potential interest and penalties related to unrecognized tax benefits as a component of income tax expense; such accrued interest and penalties are not material. With few exceptions, we are no longer subject to U.S. federal, state, and local income tax examinations for years ended before 2023 or for foreign income tax examinations before 2017.
The following table reconciles the change in the unrecognized income tax benefit (reported in Other long-term liabilities on the Consolidated Balance Sheets) during the periods presented (in millions):
Year Ended August 31,
202620252024
Unrecognized tax benefits balance at beginning of year$18.5 $21.1 $20.1 
Additions based on tax positions related to the current year4.5 5.8 4.2 
Reductions for tax positions of prior years— (0.1)(0.1)
Reductions due to lapse of statute of limitations(4.3)(8.3)(3.1)
Unrecognized tax benefits balance at end of year$18.7 $18.5 $21.1 
Total accrued interest was $2.3 million, $2.4 million, and $4.6 million as of August 31, 2026, 2025, and 2024, respectively. Income tax penalties of $0.7 million were accrued during fiscal 2026. Interest, net of tax benefits, and penalties are included in Income tax expense within the Consolidated Statements of Comprehensive Income. We are routinely under audit from various tax jurisdictions. We do not currently anticipate material audit assessments.