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Income Taxes
 12 Months Ended
Sep. 30, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of income before income taxes are presented below.
202120202019
 (in millions)
U.S.$94.0 $89.7 $78.4 
Non-U.S.0.9 4.4 3.7 
Income before income taxes$94.9 $94.1 $82.1 
The Tax Cuts and Jobs Act (the “Act”) imposed a one-time transition tax on the undistributed, previously untaxed, post-1986 foreign “earnings and profits” (as defined by the IRS) of certain United States-owned corporations. At September 30, 2021, the remaining balance of our transition obligation is $4.7 million, which will be paid annually through January 2026, as provided in the Act. Other than for Krausz’s investment in its United States subsidiary, we have not recorded income taxes for unrepatriated foreign earnings that may be subject to withholding tax or any outside cost basis differences inherent in our foreign subsidiaries, as these amounts continue to be indefinitely reinvested in foreign operations. We have a foreign tax credit carryforward of $4.5 million, for which we have recorded a valuation allowance as we do not expect to utilize it prior to expiration.
The federal income tax returns for Mueller Co. are closed for years prior to 2005 and for Mueller Water Products, Inc. for 2007 and 2008. Our 2009 through 2016 returns are closed except to the extent net operating losses from those years have been utilized on subsequent years’ returns. We also remain liable for any taxes related to U.S. Pipe income for periods prior to 2012 pursuant to the terms of the sale agreement with the purchaser of the segment.
Our state income tax returns are generally closed for years prior to 2017, except to the extent of our state net operating loss carryforwards. Our Canadian income tax returns are generally closed for years prior to 2014. We do not have any material unpaid assessments.
The components of income tax expense are as follows:
202120202019
 (in millions)
Current:
U.S. federal$21.9 $10.9 $11.6 
U.S. state and local6.3 2.7 3.9 
Non-U.S.1.6 1.3 1.5 
Total current income tax expense29.8 14.9 17.0 
Deferred:
U.S. federal(4.7)5.6 2.5 
U.S. state and local(1.3)2.0 (0.4)
Non-U.S.0.7 (0.4)(0.8)
Total deferred income tax (benefit) expense(5.3)7.2 1.3 
Income tax expense$24.5 $22.1 $18.3 

The reconciliation between income tax expense at the United States federal statutory income tax rate and reported income tax expense is presented below.

202120202019
(in millions)
Expense at U.S. federal statutory income tax rates of 21%, 21%, and 24.5%, respectively$19.9 $19.8 $17.2 
Adjustments to reconcile to income tax expense:
State income taxes, net of federal benefit3.1 3.3 3.2 
Uncertain tax positions0.3 1.0 (1.4)
Nondeductible compensation0.6 0.6 0.3 
Nondeductible expenses, other than compensation0.5 0.4 1.3 
Valuation allowances(0.4)0.1 1.3 
Basis difference in foreign investment1.5 0.1 (1.1)
Foreign income taxes(1.2)— 0.1 
Federal transition tax— — (0.6)
Excess tax benefits related to stock compensation(0.2)(0.5)(0.3)
Tax credits(1.6)(1.8)(1.8)
Other2.0 (0.9)0.1 
Income tax expense$24.5 $22.1 $18.3 

The following table summarizes information concerning our gross unrecognized tax benefits.

20212020
 (in millions)
Balance at beginning of year$4.5 $3.3 
Increase related to current year positions0.6 1.5 
Decrease as a result of statute of limitations lapse(0.3)(0.3)
Balance at end of year$4.8 $4.5 

Substantially all unrecognized tax benefits would, if recognized, impact the effective tax rate. We recognize interest related to uncertain tax positions as interest expense and recognize any penalties incurred as a component of selling, general and administrative expenses. At September 30, 2021 and 2020, we had $0.6 million and $0.4 million, respectively, of accrued interest expense related to unrecognized tax benefits.
Deferred income tax balances are presented below.
 September 30,
 20212020
 (in millions)
Deferred income tax assets:
Accrued expenses$12.7 $12.2 
Lease liabilities8.2 7.3 
Inventories6.1 4.6 
State net operating losses2.8 3.0 
Net operating losses and credit carryovers14.8 3.0 
Stock-based compensation3.8 2.6 
Pension— 0.2 
Other2.9 1.1 
Total deferred income tax assets51.3 34.0 
Valuation allowance(13.6)(2.9)
Total deferred income tax assets, net of valuation allowance37.7 31.1 
Deferred income tax liabilities:
Intangible assets86.3 90.2 
Lease assets7.6 6.6 
Basis difference in foreign investment6.8 5.0 
Pension3.9 — 
Property, plant and equipment27.4 25.1 
Other0.5 0.5 
Total deferred income tax liabilities132.5 127.4 
Net deferred income tax liabilities$94.8 $96.3 
We reevaluate the need for a valuation allowance against our deferred tax assets each quarter considering results to date, projections of taxable income, tax planning strategies and reversing taxable temporary differences.
Our state net operating loss carryforwards, which expire between the years 2024 and 2032, remain available to offset future taxable earnings.