INCOME TAXES (Notes)

6 Months Ended

Apr. 30, 2023

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

For the three and six months ended April 30, 2023, our income tax expense was $75 million with an effective tax rate of 19.9 percent and $133 million with an effective tax rate of 16.9 percent, respectively. Our effective tax rate increased in 2023 compared to 2022, primarily due to the mandatory capitalization of research and development expenses, which became effective for Agilent in the first quarter of 2023, due to a change in tax law from the Tax Cuts and Jobs Act of 2017. For the three months ended April 30, 2023, there were no significant discrete items. For the six months ended April 30, 2023, our effective tax rate and the resulting provision for income taxes were also impacted by the excess tax benefits from stock-based compensation of $13 million along with the expiration of various foreign statutes of limitations which resulted in the recognition of previously unrecognized tax benefits of $9 million.

For the three and six months ended April 30, 2022, our income tax expense was $59 million with an effective tax rate of 17.7 percent and $95 million with an effective tax rate of 14.6 percent, respectively. For the three months ended April 30, 2022, there were no significant discrete items. For the six months ended April 30, 2022, our effective tax rate and the resulting provision for income taxes were also impacted by the excess tax benefits from stock-based compensation of $17 million along with the expiration of various foreign statutes of limitations which resulted in the recognition of previously unrecognized tax benefits of $8 million.

In the U.S., tax years remain open back to the year 2018 for federal income tax purposes and for significant states. In other major jurisdictions where the company conducts business, the tax years generally remain open back to the year 2013.

With these jurisdictions and the U.S., it is reasonably possible there could be significant changes to our unrecognized tax benefits in the next twelve months due to either the expiration of a statute of limitation or a tax audit settlement which will be partially offset by an anticipated tax liability related to unremitted foreign earnings, where applicable. Given the number of years and numerous matters that remain subject to examination in various tax jurisdictions, management is unable to estimate the range of possible changes to the balance of our unrecognized tax benefits.