Income Taxes

9 Months Ended

Mar. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company is subject to income taxes in the U.S. and various state and foreign jurisdictions. Tax statutes and regulations within each jurisdiction are subject to interpretation and require the application of significant judgment. The Company is currently under examination by the Internal Revenue Service for fiscal years 2017 through 2021 and a state jurisdiction for fiscal years 2019 and 2020. The Company does not expect resolution of these examinations to have a material impact on its results of operations, financial condition, or cash flows.

During fiscal year 2023, a provision of the Tax Cuts and Jobs Act of 2017 (TCJA) went into effect which eliminated the option to deduct domestic research and development costs in the year incurred and instead requires taxpayers to amortize such costs over five years. Although it is possible that Congress amends this provision of the TCJA, potentially with retroactive effect, we have no assurance that Congress will take any action with respect to this provision. For the three and nine months ended March 31, 2023, the Company recognized a liability for unrecognized tax benefits and a corresponding deferred tax asset of $30.9 million and $70.7 million, respectively, related to the capitalization and amortization of research costs related to provisions of the TCJA becoming effective.

The Company’s effective income tax rate was 23.4% and 22.8% for the three and nine months ended March 31, 2023, respectively, and 17.9% and 20.9% for the three and nine months ended March 31, 2022, respectively. The effective tax rates for the three and nine months ended March 31, 2023 and 2022 both benefited from the favorable impact of research and development credits and the amount of excess tax benefits related to stock-based compensation, and are partially offset by the unfavorable impacts of certain executive compensation.