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Income Taxes
 3 Months Ended
Aug. 31, 2025
Income Taxes

8. INCOME TAXES

Income tax expense was $7,470 during the three months ended August 31, 2025. Income tax benefit was $3,000 during the three months ended August 31, 2024. The net tax expense for the three months ended August 31, 2025 is primarily related to pre-tax income due to gains on the sale of our Cleaners and Disinfectants business. The Organization for Economic Cooperation and Development (“OECD”) Pillar Two global minimum tax rules, which generally provide for a minimum effective tax rate of 15%, are intended to apply for tax years beginning in 2024. We continue to closely monitor developments and evaluate the impact these new rules will have on our tax rate, including eligibility to qualify for certain safe harbors. Where no safe harbor is met, we have included in our income tax for the three months ended August 31, 2025, a forecasted amount of “top-up” tax for our foreign subsidiaries as required under the applicable rules of the countries that have adopted the Pillar Two directives. For the three months ended August 31, 2025, no foreign subsidiary is forecasted to incur a material top-up tax under Pillar Two.

 

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted into law in the United States. OBBBA includes significant provisions, including the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for depreciation and interest expenses. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. There was not a significant impact to our income tax expense or effective tax rate for the three months ended August 31, 2025.

The total amounts of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of August 31, 2025 and May 31, 2025 were $4,732 and $3,849, respectively. Increases in unrecognized tax benefits are primarily associated with the acquired 3M FSD, including positions for transfer pricing and research and development credits.