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Income Taxes
 9 Months Ended
Sep. 30, 2025
Income Tax Disclosure [Abstract]  
Income Taxes
Note 11: Income Taxes
Our effective tax rate for the quarter and nine months ended September 30, 2025 was 17.7% and 16.8%, respectively, as compared to 19.5% and 17.5% for the quarter and nine months ended September 30, 2024, respectively.
The lower effective tax rate for the quarter ended September 30, 2025 compared to September 30, 2024 was primarily driven by the absence of a $0.2 billion tax charge related to U.S. federal income taxes owed by the Company resulting from a favorable non-U.S. tax ruling Otis received in the quarter ending September 30, 2024 impacting pre-separation tax years. The lower effective tax rate also included additional tax expense in the quarter ended September 30, 2025 due to the sale of the Collins actuation and flight control business and higher taxes for 2025, principally driven by the enactment of “An Act to Provide for Reconciliation Pursuant to Title II of the H. Con. Res. 14” on July 4, 2025. Both periods also included tax benefits associated with certain legal entity reorganizations.
The effective tax rates for the nine months ended September 30, 2025 and 2024 were relatively consistent. In addition to the items noted above, the effective tax rate for the nine months ended September 30, 2024 included a $0.3 billion benefit from the impact of the conclusion of the examination phases of the RTX and Rockwell Collins audits, that was more than offset by an unfavorable impact for the tax cost associated with the sale of the CIS business and the impact of the Resolution of Certain Legal Matters accrued during the second quarter of 2024, in which no tax benefit was recorded.
We conduct business globally and, as a result, RTX or one or more of our subsidiaries files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business, we are subject to examination by taxing authorities throughout the world, including such major jurisdictions as Canada, China, France, Germany, India, Poland, Saudi Arabia, Singapore, Switzerland, the United Kingdom, and the United States. With few exceptions, we are no longer subject to U.S. federal, state, and local, or non-U.S. income tax examinations for years before 2014.
In connection with certain Internal Revenue Service (IRS) audits, the Company has previously filed protests with respect to certain IRS proposed adjustments for RTX (formerly United Technologies Corporation) tax years 2017 and 2018, pre-acquisition Rockwell Collins tax years 2016, 2017, and 2018, and pre-merger Raytheon Company tax years 2017, 2018, and 2019 as well as certain refund claims of Raytheon Company for tax years 2014, 2015, and 2016 filed prior to the Raytheon merger. The Company is in the process of disputing these adjustments at the Appeals Division of the IRS. The Company expects resolution at the Appeals Division for the RTX and Rockwell tax years within the next twelve months. The timing of any resolution at the Appeals Division for the Raytheon Company tax years is uncertain.
During the quarter ended March 31, 2025, the Company received an unfavorable decision from the Appeals Committee of the Kingdom of Saudi Arabia (KSA) General Secretariat of the Tax Committees (GTSC) and recorded the net income impact of this decision. The Company continues to believe the position of the KSA tax authority is not supported by the facts in question or KSA tax law and is pursuing available options to seek reversal of the GSTC’s decision.