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Income Taxes | 6 Months Ended
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Mar. 31, 2026
Income Tax Disclosure [Abstract] |
Income Taxes | 9. Income Taxes
(in thousands) |  | Three months ended |  |  | Six months ended |
|  | March 31, 2026 |  |  | March 31, 2025 |  |  | March 31, 2026 |  |  | March 31, 2025 |
Income before income taxes |  | $ | 746,799 |  |  | $ | 205,249 |  |  | $ | 949,774 |  |  | $ | 298,403 |
Provision for income taxes |  | $ | 156,076 |  |  | $ | 42,605 |  |  | $ | 192,533 |  |  | $ | 53,527 |
Effective income tax rate |  |  | 21 | % |  |  | 21 | % |  |  | 20 | % |  |  | 18 | %
The effective tax rate for the six months ended March 31, 2026 was higher than the effective tax rate for the corresponding prior-year period primarily due to changes in the geographic mix of income before taxes. For the three and six months ended March 31, 2026, the provision for income taxes includes tax expense of $102.4 million on the gain on sale of $462.6 million related to the Kepware and ThingWorx divestiture. The effective tax rate for the six months ended March 31, 2026 also reflected a net income tax benefit of $7.1 million related to Internal Revenue Service (IRS) procedural guidance, as described below. The six months ended March 31, 2025 included a benefit of $10.4 million associated with the impact of tax reserves related to prior years in a foreign jurisdiction. In the six months ended March 31, 2026, our rate included the effects of IRS procedural guidance requiring consent for previously automatic changes of accounting method. In 2024, we requested consent from the IRS to change our tax accounting method for the treatment of certain deductions. In the quarter ended December 31, 2025, upon receiving consent from the IRS, we released the reserve established in 2025 related to the procedural guidance, which resulted in a net income tax benefit of $7.1 million for the reversal of the associated accrued interest and indirect effects on GILTI and FDII in 2024. In the normal course of business, PTC and its subsidiaries are examined by various taxing authorities, including the IRS in the U.S. We regularly assess the likelihood of additional assessments by tax authorities and provide for these matters as appropriate. We are currently under audit by tax authorities in several jurisdictions. Audits by tax authorities typically involve examination of the deductibility of certain permanent items, transfer pricing, limitations on net operating losses and tax credits. As of March 31, 2026 and September 30, 2025, income taxes payable and income tax accruals recorded on the accompanying Consolidated Balance Sheets were $161.3 million (118.3 million in Accrued income taxes and $43.0 million recorded in Other Liabilities) and $179.1 million ($28.7 million in Accrued income taxes and $150.4 million in Other liabilities), respectively. As of March 31, 2026 and September 30, 2025, we had unrecognized tax benefits of $50.5 million and $157.7 million, respectively. This decrease predominantly relates to the release of the reserve established in 2025 related to the IRS procedural guidance, primarily resulting in corresponding decreases to Deferred tax assets and the reserve for unrecognized tax benefits within Other liabilities. Additionally, this resulted in a $7.1 million net income tax benefit as described above. If all our unrecognized tax benefits as of March 31, 2026 were to become recognizable in the future, we would record a benefit to the income tax provision of $50.5 million, which would be partially offset by an increase in the U.S. valuation allowance of $5.6 million. Although we believe our tax estimates are appropriate, the final determination of tax audits and any related litigation could result in favorable or unfavorable changes in our estimates. We believe it is reasonably possible that within the next 12 months the amount of unrecognized tax benefits related to the resolution of multi-jurisdictional tax positions could be reduced by up to $1 million. On July 4, 2025, the “One Big Beautiful Bill Act” (the “Act”) was enacted into law. The Act includes changes to U.S. tax law that are applicable to us beginning in 2026. These changes include provisions allowing accelerated tax deductions for qualified property and research expenditures. Our financials reflect the impact of the provisions of the Act that are applicable beginning 2026.

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