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v3.25.3

Income Taxes | 12 Months Ended
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Sep. 30, 2025
Income Tax Disclosure [Abstract] |
Income Taxes | Note 7 — Income Taxes Income (loss) before income taxes comprises the following:
| 2025 |  | 2024 |  | 2023
Domestic | $ | 580 |  |  | $ | 305 |  |  | $ | (346) |
Foreign | 116 |  |  | 35 |  |  | (1,491) |
Total income (loss) before income taxes | $ | 696 |  |  | $ | 340 |  |  | $ | (1,837) |
The provisions for income taxes consist of the following:
| 2025 |  | 2024 |  | 2023
Current expense (benefit): |  |  |  |  |
Federal | $ | — |  |  | $ | (25) |  |  | $ | (1) |
State | 14 |  |  | 12 |  |  | 37 |
Foreign | 50 |  |  | 32 |  |  | 49 |
Total current expense (benefit) | 64 |  |  | 19 |  |  | 85 |
Deferred expense (benefit): |  |  |  |  |
Federal | (41) |  |  | 82 |  |  | 34 |
State | 8 |  |  | 34 |  |  | (21) |
Foreign | (13) |  |  | (64) |  |  | (433) |
Total deferred expense (benefit) | (46) |  |  | 52 |  |  | (420) |
Total income tax expense (benefit) | $ | 18 |  |  | $ | 71 |  |  | $ | (335) |
Federal income taxes for Fiscal 2025, Fiscal 2024 and Fiscal 2023 are net of foreign tax credits of $47, $17, and $25, respectively. A reconciliation from the U.S. federal statutory tax rate to our effective tax rate is as follows:
| 2025 |  | 2024 |  | 2023
U.S. federal statutory tax rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
Difference in tax rate due to: |  |  |  |  |
Goodwill impairment not deductible for tax | — |  |  | 11.6 |  |  | (7.3) |
State income taxes, net of federal benefit | 4.6 |  |  | 6.8 |  |  | (1.7) |
Investment tax credits | (12.7) |  |  | (6.8) |  |  | 0.5 |
Valuation allowance adjustments | (8.8) |  |  | (6.3) |  |  | 1.1 |
Regulated entity depreciation normalization | (2.0) |  |  | (4.5) |  |  | 0.7 |
Notional interest deduction | (1.7) |  |  | (3.8) |  |  | 0.7 |
Nontaxable sale of equity investment | 1.5 |  |  | — |  |  | — |
Effects of tax rate changes – State, net of federal benefit | (0.7) |  |  | 3.6 |  |  | 0.2 |
State NOL adjustment upon disposition | — |  |  | 2.4 |  |  | — |
Uncertain tax positions | 0.8 |  |  | (2.4) |  |  | (0.7) |
Impairment of equity investment | — |  |  | 2.2 |  |  | — |
Federal refund interest accrual | (0.5) |  |  | (1.1) |  |  | — |
Effects of foreign operations | (0.6) |  |  | 0.1 |  |  | 3.1 |
Other, net | 1.7 |  |  | (1.9) |  |  | 0.6 |
Effective tax rate | 2.6 | % |  | 20.9 | % |  | 18.2 | %
In July 2025, the One Big Beautiful Bill Act (the “OBBBA”) was enacted, introducing certain amendments to the U.S. tax law. Key provisions affecting the Company include: (1) changes to interest expense limitations; (2) expanded bonus deprecation; (3) accelerated expensing of research and development costs; and (4) certain revisions to international tax rules. The Company recorded an income tax benefit of $31 in the fourth quarter of Fiscal 2025 related to the release of a valuation allowance associated with previously disallowed interest expense. The enactment of the OBBBA did not otherwise have a material impact on the Company’s effective tax rate in Fiscal 2025. In July 2022, tax legislation was enacted in Pennsylvania reducing the state’s corporate net income tax rate from 9.99% to 4.99% over a nine-year period, beginning with an initial reduction to 8.99% beginning in Fiscal 2024. The legislation resulted in tax expense (benefit) of $5, $12 and $4 in Fiscal 2025, Fiscal 2024 and Fiscal 2023, respectively, based upon the Company’s analysis of future reversals of net deferred tax liabilities. Federal refund claims of $41 and $56 are included in “Income taxes receivable” on the Consolidated Balance Sheet at September 30, 2025 and 2024, respectively. Refund claims of $36 at September 30, 2025 and 2024, were related to Fiscal 2021 federal net operating losses carried back to Fiscal 2016 under CARES legislation enacted in 2020. The CARES refund claim is under Joint Committee review. Our effective tax rate is subject to the impact of changes to the taxation of foreign source income made by the TCJA and the high tax exception regulations issued in July 2020. Income tax expense for Fiscal 2025, Fiscal 2024 and Fiscal 2023 includes $15, $2, and $13, respectively, of GILTI taxes that are treated as current period costs and carry no related deferred taxes. Pennsylvania and West Virginia utility ratemaking practices permit the flow through to ratepayers of state tax benefits resulting from accelerated tax depreciation. For Fiscal 2025, Fiscal 2024 and Fiscal 2023, the beneficial effects of state tax flow through of accelerated depreciation reduced income tax expense by $11, $12, and $11, respectively. Deferred tax liabilities (assets) comprise the following at September 30:
| 2025 |  | 2024 |
Excess book basis over tax basis of property, plant and equipment | $ | 1,051 |  |  | $ | 994 |  |
Intangible assets and goodwill | 105 |  |  | 86 |  |
Utility regulatory assets | 80 |  |  | 74 |  |
Investment in AmeriGas Partners | 71 |  |  | 31 |  |
Other | 113 |  |  | 50 |  |
Gross deferred tax liabilities | 1,420 |  |  | 1,235 |  |
Interest expense | (150) |  |  | (118) |  |
Operating loss carryforwards | (73) |  |  | (72) |  |
Utility regulatory liabilities | (66) |  |  | (72) |  |
Foreign tax credit carryforwards | (12) |  |  | (49) |  |
Employee-related benefits | (25) |  |  | (33) |  |
Investment tax credits | (116) |  |  | (26) |  |
Utility environmental liabilities | (19) |  |  | (16) |  |
Pension plan liabilities | — |  |  | (8) |  |
Derivative instrument liabilities | (19) |  |  | (3) |  |
Other | (121) |  |  | (58) |  |
Gross deferred tax assets | (601) |  |  | (455) |  |
Deferred tax assets valuation allowance | 71 |  |  | 130 |  |
Net deferred tax liabilities | $ | 890 |  |  | $ | 910 |  |
At September 30, 2025, we carried foreign net operating loss carryforwards of $10 relating to Flaga, $19 at certain subsidiaries of UGI France, $5 relating to Belgium, and $65 in the Netherlands with no expiration dates. We have state net operating loss carryforwards primarily relating to certain subsidiaries that approximate $1,269 and expire through 2045. We also have federal operating loss carryforwards of $1 for certain operations of AmeriGas Propane. At September 30, 2025, deferred tax assets relating to operating loss carryforwards amounted to $73 related to various UGI subsidiaries. Valuation allowances against deferred tax assets exist for foreign tax credit carryforwards, net operating loss carryforwards of foreign subsidiaries, capital loss carryforwards and a notional interest deduction. The valuation allowance for all deferred tax assets decreased $59 in Fiscal 2025, which included a decrease of $45 against FTCs and $31 against previously disallowed interest expense, offset by an increase of $18 against the notional interest deduction. We conduct business and file tax returns in the U.S., and various local, state and foreign jurisdictions. Our U.S. federal income tax returns are settled through the 2021 tax year, and our European tax returns are effectively settled for various years from 2017 to 2021. State and other income tax returns in the U.S. are generally subject to examination for a period of three to five years after the filing of the respective returns. The Company’s unrecognized tax benefits including amounts related to accrued interest, which if subsequently recognized would be recorded as a benefit to income taxes, amounted to $24, $18, and $26 at September 30, 2025, 2024 and 2023, respectively. Generally, a net reduction in unrecognized tax benefits could occur because of the expiration of the statute of limitations in certain jurisdictions or as a result of settlements with tax authorities. The expected change in unrecognized tax benefits and related interest in the next twelve months as the result of the expiration of certain statutes is not material. A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:
| 2025 |  | 2024 |  | 2023
Unrecognized tax benefits — beginning of year | $ | 18 |  |  | $ | 26 |  |  | $ | 5 |
Additions for tax positions of the current year | 7 |  |  | 4 |  |  | 3 |
Decreases for tax positions taken in prior years | (2) |  |  | (11) |  |  | — |
Increases for tax positions taken in prior years | 1 |  |  | — |  |  | 19 |
Settlements with tax authorities/statute lapses | — |  |  | (1) |  |  | (1) |
Unrecognized tax benefits — end of year | $ | 24 |  |  | $ | 18 |  |  | $ | 26 |

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