Income Taxes

9 Months Ended

Jan. 31, 2025

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Our consolidated interim effective tax rate is based on our expected annual operating income, statutory tax rates, and income tax laws in the various jurisdictions where we operate. Significant or unusual items, including adjustments to accruals for tax uncertainties, are recognized in the fiscal quarter in which the related event or a change in judgment occurs. The effective tax rate on ordinary income for the full fiscal year is expected to be 22.5%, which is higher than the U.S. federal statutory rate of 21.0%, due to the impact of state taxes and the tax effects of foreign operations, partially offset by the beneficial impact of the foreign-derived intangible income deduction.

The effective tax rate of 19.5% for the nine months ended January 31, 2025, was lower than the expected tax rate of 22.5% on ordinary income for the full fiscal year ending April 30, 2025, primarily due to the beneficial impact of prior fiscal year true-ups. The effective tax rate of 19.5% for the nine months ended January 31, 2025, was lower than the effective tax rate of 20.3% for the same period last year, primarily due to the beneficial impact of prior fiscal year true-ups in the current year, partially offset by higher state taxes, the increased unfavorable tax effects of foreign earnings, and the absence of the beneficial impact of tax rate differences on the sale of the Finlandia vodka business in the prior fiscal year.

The OECD (Organization for Economic Co-operation and Development) 15% global minimum tax under the Pillar Two Model Rules, which is now effective in countries with enacted legislation, did not materially impact our financial results in the nine months ended January 31, 2025. We will continue to evaluate the impact in future periods as previously-enacting countries issue related guidance and additional countries consider adoption of the global minimum tax rules.

In December 2024, the U.S. Treasury Department and IRS released final and proposed regulations related to the determination under section 987 of taxable income or loss and foreign currency gain or loss with respect to a qualified business unit (QBU). We are currently evaluating the impact of adopting the final regulations on our current year provision, but do not anticipate them to have a material impact.