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Income Taxes
 9 Months Ended
Mar. 31, 2026
Income Taxes  
Income Taxes

11. Income Taxes

The determination of the annual effective tax rate is based upon a number of significant estimates and judgments, including the estimated annual pretax income in each tax jurisdiction in which we operate and the development of tax planning strategies during the year. In addition, as a global commercial enterprise, our tax expense can be impacted by changes in tax rates or laws, the finalization of tax audits and reviews and other factors that cannot be predicted with certainty. As such, there can be significant volatility in interim tax provisions.

The effective tax rates for the three months ended March 31, 2025 and 2026 were 14.3% and 18.3%, respectively. During the three months ended March 31, 2025, we recognized a net discrete tax benefit of $4.5 million related to equity-based compensation under ASU 2016-09 and changes in prior year tax estimates and uncertain tax positions. During the three months ended March 31, 2026 we recognized a net discrete tax benefit of $0.4 million related to equity-based compensation under ASU 2016-09 and a benefit of $2.3 million for changes in uncertain tax positions from prior years. The effective tax rates for the nine months ended March 31, 2025 and 2026 were 19.5% and 19.1%, respectively. During the nine months ended March 31, 2025, we recognized net discrete tax benefits of $1.3 million related to equity-based compensation under ASU 2016-09 and $4.0 million for changes in prior-years tax estimates and uncertain tax positions. During the nine months ended March 31, 2026, we recognized net discrete tax benefits of $2.1 million related to equity-based compensation under ASU 2016-09 and $3.3 million for changes in prior-years tax estimates and uncertain tax positions.

On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was signed into law. Key income-tax related provisions of the OBBBA relevant to our Company include the removal of mandatory capitalization of domestic research and development expenditures, permanent extension of bonus depreciation and revisions to international tax regimes. We are evaluating the financial impact of OBBBA, which is in effect for the current fiscal year ending June 30, 2026. The legislation will affect the timing and recognition of certain deductions, which, if implemented, could impact our effective tax rate and deferred tax balances in future periods.