Income Taxes

3 Months Ended

Nov. 30, 2021

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

Income tax expense is based on taxable income determined in accordance with current enacted laws and tax rates. Deferred income taxes are recorded for the temporary differences between the financial statement and the tax bases of assets and liabilities using currently enacted tax rates.

Provision for Income Taxes

The provision for income taxes is as follows:

	Three Months Ended
	November 30,
(in thousands)	2021			2020
Income before income taxes	$	119,930		$	120,232
Provision for income taxes	$	12,283		$	19,026
Effective tax rate	10.2		%	15.8		%

Our effective tax rate is based on recurring factors and non-recurring events, including the taxation of foreign income. Our effective tax rate will vary based on, among other things, changes in levels of foreign income, as well as discrete and other non-recurring events that may not be predictable. Our effective tax rate is lower than the applicable U.S. corporate income tax rate for the three months ended November 30, 2021, driven mainly by research and development ("R&D") tax credits and a foreign derived intangible income ("FDII") deduction. The effective tax rate for the three months ended November 30, 2021 is further reduced by windfall tax benefits associated with the employee exercise of stock options.

For the three months ended November 30, 2021, the provision for income taxes was $12.3 million, compared with $19.0 million for the same period a year ago. The provision decreased mainly due to $6.9 million in higher windfall tax benefits during the three months ended November 30, 2021, compared with the prior year period.