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INCOME TAXES
 12 Months Ended
Jun. 30, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The provision for income taxes, by tax jurisdiction, consisted of the following for the fiscal years ended June 30:
202520242023
Current
Federal$165 $132 $153 
State39 18 33 
Foreign68 56 40 
Total current$272 $206 $226 
Deferred
Federal$(17)$(99)$(120)
State(2)(5)(28)
Foreign1 4 (1)
Total deferred(18)(100)(149)
Total$254 $106 $77 
Income taxes paid, net of refunds, were $264, $347, and $73 for the fiscal year ended June 30, 2025, 2024, and 2023, respectively. The higher tax payments in fiscal year 2024 and lower tax payments in fiscal year 2023 were primarily driven by payments of fiscal year 2023 income taxes in fiscal year 2024 that were previously deferred as a result of the relief provided by the IRS announced in January 2023 due to winter storms in California.
The components of Earnings before income taxes, by tax jurisdiction, consisted of the following for the fiscal years ended June 30:
202520242023
United States$886 $311 $154 
Foreign192 87 84 
Total$1,078 $398 $238 
A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate on operations follows for the fiscal years ended June 30:
202520242023
Statutory federal tax rate21.0 %21.0 %21.0 %
State taxes (net of federal tax benefits)2.7 2.5 1.6 
Foreign tax rate differential2.6 7.7 8.6 
Federal excess tax benefits(0.3)(0.3)(1.8)
Net U.S. tax on foreign income(0.5)(5.2)(2.3)
Loss on divestiture
2.3 10.5 — 
International legal entity reorganization
(1.1)(6.1)— 
VMS goodwill impairment— — 8.6 
Federal research and development credits(0.5)(1.2)(2.7)
Other differences(2.6)(2.4)(0.6)
Effective tax rate23.6 %26.5 %32.4 %
The One Big Beautiful Bill Act, was enacted in the United States on July 4, 2025. This legislation includes provisions that allow accelerated tax deductions for acquisitions of qualified property and for research expenses. It also modifies the U.S. taxation of certain earnings associated with international business. The Company is in the process of evaluating the impact of this legislation on its consolidated financial statements.
The Inflation Reduction Act was signed into law on August 16, 2022. This legislation introduced a new 15% corporate minimum tax for certain large corporations, effective at the beginning of the Company’s fiscal 2024 and it enacted a 1% excise tax on the value of share repurchases, net of new share issuances, after December 31, 2022. These provisions, as well as other corporate tax changes included in the legislation, have not had a material impact on the Company's consolidated financial statements and are not expected to have a material impact on the Company’s financial statements in the foreseeable future.
Foreign withholding taxes are provided on unremitted foreign earnings that are not indefinitely reinvested at the time the earnings are generated. The Company regularly reviews and assesses whether there are any changes to its indefinite reinvestment assertion. None of the undistributed earnings of its foreign subsidiaries were indefinitely reinvested. As a result, the Company is providing foreign withholding taxes on the undistributed earnings of all foreign subsidiaries where applicable. These withholding taxes had no significant impact on the Company’s consolidated results.
The components of net deferred tax assets (liabilities) as of June 30 are shown below:
20252024
Deferred tax assets
Compensation and benefit programs$105 $109 
Loss and tax credit carryforwards
208 153 
Operating and finance lease liabilities106 111 
Accruals and reserves27 33 
Capitalized research and development63 43 
Inventory costs18 29 
Other33 33 
Subtotal560 511 
Valuation allowance(166)(115)
Total deferred tax assets$394 $396 
Deferred tax liabilities
Property, plant and equipment and intangible assets
$(115)$(84)
Lease right-of-use assets(95)(100)
Other(37)(36)
Total deferred tax liabilities(247)(220)
Net deferred tax assets (liabilities)$147 $176 
The net deferred tax assets and liabilities included in the consolidated balance sheet at June 30 were as follows:
20252024
Net deferred tax assets (1)
$167 $198 
Net deferred tax liabilities(20)(22)
Net deferred tax assets (liabilities)$147 $176 
(1)Net deferred tax assets are recorded in Other assets.
The Company reviews its deferred tax assets for recoverability on a quarterly basis. A valuation allowance is established when the Company believes that it is more likely than not that some portion of its deferred tax assets will not be realized. Valuation allowances have been provided to reduce deferred tax assets to amounts considered recoverable.
Changes in the valuation allowance on deferred tax assets were as follows for the fiscal years ended June 30:
202520242023
Valuation allowance at beginning of year$(115)$(59)$(52)
Net decrease/(increase) for U.S. capital loss carryforwards
(62)(46)— 
Net decrease/(increase) for other foreign deferred tax assets1 (2)(1)
Net decrease/(increase) for foreign and U.S. net operating loss carryforwards and tax credits10 (8)(6)
Valuation allowance at end of year$(166)$(115)$(59)
The Company's carryforwards for capital losses, net operating losses, and tax credits, with related valuation allowances were as follows as of June 30:
2025
CarryforwardsValuation AllowancesNet CarryforwardsFiscal Year Expiring
Capital losses in U.S. jurisdictions108 (108)— 2030
Net operating losses
U.S. jurisdictions2 (2)— 2031 - 2038
U.S. jurisdictions (with no expiration)4 (3)1 N/A
Foreign jurisdictions16 (12)4 2026 - 2039
Foreign jurisdictions (with no expiration)7 — 7 N/A
Total net operating losses29 (17)12 
Income tax credits
U.S. jurisdictions33 — 33 2026 - 2035
U.S. jurisdictions (with no expiration)2 — 2 N/A
Foreign jurisdictions30 (30)— 2026
Foreign jurisdictions (with no expiration)6 (5)1 N/A
Total income tax credits71 (35)36 
Total carryforwards$208 $(160)$48 
2024
CarryforwardsValuation AllowancesNet Carryforwards
Capital losses in U.S. jurisdictions46 (46)— 
Net operating losses
U.S. jurisdictions6 (5)1 
U.S. jurisdictions (with no expiration)9 (8)1 
Foreign jurisdictions18 (16)2 
Foreign jurisdictions (with no expiration)8 — 8 
Total net operating losses41 (29)12 
Income tax credits
U.S. jurisdictions30 — 30 
U.S. jurisdictions (with no expiration)2 — 2 
Foreign jurisdictions30 (30)— 
Foreign jurisdictions (with no expiration)4 (3)1 
Total income tax credits66 (33)33 
Total carryforwards$153 $(108)$45 
The Company files income tax returns in the U.S. federal and various state, local and foreign jurisdictions. The federal statute of limitations has expired for all tax years through June 30, 2015. Various income tax returns in state and foreign jurisdictions are currently in the process of examination.
The Company recognizes interest and penalties related to uncertain tax positions as a component of income tax expense. As of June 30, 2025 and 2024, the total balance of accrued interest and penalties related to uncertain tax positions was $4 and $3, respectively. Interest and penalties related to uncertain tax positions included in income tax expense resulted in an expense of $1 in fiscal year 2025, an expense of $1 in fiscal year 2024, and a net benefit of $0 in fiscal year 2023.
The following is a reconciliation of the beginning and ending amounts of the Company’s gross unrecognized tax benefits for the fiscal years ended June 30:
202520242023
Unrecognized tax benefits at beginning of year$22 $17 $17 
Gross increases - tax positions in prior periods3 — 1 
Gross decreases - tax positions in prior periods(1)(4)(3)
Gross increases - current period tax positions3 9 2 
Unrecognized tax benefits at end of year$27 $22 $17 
Included in the balance of unrecognized tax benefits as of June 30, 2025, 2024 and 2023, were potential benefits of $20, $15 and $14, respectively, which if recognized, would affect the effective tax rate. Unrecognized tax benefits are not expected to significantly increase or decrease within the next 12 months.