INCOME TAXES

12 Months Ended

Sep. 30, 2025

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

Pretax earnings from continuing operations consist of the following:

	2023		2024	2025
United States	$	1,529	712	1,118
Non-U.S.	1,374		1,308	1,816
Total pretax earnings	$	2,903	2,020	2,934

The principal components of income tax expense follow:

	2023		2024	2025
Current:
U.S. federal	$	463	325	463
State and local	47		34	56
Non-U.S.	369		452	481
Deferred:
U.S. federal	(159)		(284)	(212)
State and local	(17)		(18)	11
Non-U.S.	(61)		(94)	(103)
Income tax expense	$	642	415	696

Reconciliations of the U.S. federal statutory income tax rate to the Company's effective tax rate follow.

	2023		2024		2025
U.S. federal statutory rate	21.0	%	21.0	%	21.0	%
State and local taxes, net of U.S. federal tax benefit	0.8		0.6		1.8
Non-U.S. rate differential	0.8		2.0		1.2
Non-U.S. tax holidays	(0.8)		(1.7)		(1.3)
Research and development credits	(0.5)		(1.2)		(0.9)
Foreign derived intangible income	(2.6)		(3.8)		(2.0)
U.S. taxation of Non-U.S. Earnings	1.3		2.1		1.7
Subsidiary restructuring	—		(2.9)		(0.2)
Test & Measurement purchase accounting	—		1.7		—
Other	2.1		2.8		2.4
Effective income tax rate	22.1	%	20.6	%	23.7	%

State and local taxes in 2025 include a discrete deferred expense due to the purchase of the remaining shares of AspenTech. Test & Measurement purchase accounting in 2024 reflects a lower tax benefit on inventory step-up amortization. The increase in Other in 2024 includes the losses on two small divestitures, which were non-deductible for tax purposes. See Note 4 for further details related to acquisitions and divestitures.

On July 4, 2025, the One Big Beautiful Bill Act (the "OBBBA") was signed into law. The OBBBA extends certain key elements of the 2017 Tax Cuts and Jobs Act including provisions related to bonus depreciation and domestic research and development, among others. The OBBBA did not have a material impact in the current fiscal year. The Company is currently assessing the impact of the OBBBA on future periods.

Non-U.S. tax holidays reduce tax rates in certain jurisdictions. Approximately 60 percent of the tax holidays expire over the next two years, with the remainder expiring by 2038.

Following are changes in unrecognized tax benefits before considering recoverability of any cross-jurisdictional tax credits (U.S. federal, state and non-U.S.) and temporary differences. The amount of unrecognized tax benefits is not expected to change significantly in the next 12 months.

	2024		2025
Unrecognized tax benefits, beginning	$	235	291
Additions for current year tax positions	59		24
Additions for prior year tax positions	18		12
Reductions for prior year tax positions	(22)		(26)
Acquisitions and divestitures	13		—
Reductions for settlements with tax authorities	(7)		(8)
Reductions for expiration of statutes of limitations	(5)		(5)
Unrecognized tax benefits, ending	$	291	288

If none of the unrecognized tax benefits shown is ultimately paid, the tax provision and the calculation of the effective tax rate would be favorably impacted by $245, which is net of cross-jurisdictional tax credits and temporary differences. The Company accrues interest and penalties related to income taxes in income tax expense. Total expense recognized was $6, $6 and $1 in 2025, 2024 and 2023, respectively. As of September 30, 2025 and 2024, total accrued interest and penalties were $46 and $27, respectively.

The U.S. is the major jurisdiction for which the Company files income tax returns. Examinations for U.S. federal are complete through 2019. The status of state and non-U.S. tax examinations varies due to the numerous legal entities and jurisdictions in which the Company operates.

The principal items that gave rise to deferred income tax assets and liabilities follow:

	2024		2025
Deferred tax assets:
Net operating losses, capital losses and tax credits	$	283	276
Accrued liabilities	149		149
Postretirement and postemployment benefits	17		13
Employee compensation and benefits	121		122
Other	176		249
Total	$	746	809
Valuation allowances	$	(256)	(251)
Deferred tax liabilities:
Intangibles	$	(2,161)	(1,871)
Pensions	(193)		(195)
Property, plant and equipment	(121)		(149)
Undistributed non-U.S. earnings	(36)		(34)
Other	(53)		(51)
Total	$	(2,564)	(2,300)
Net deferred income tax liability	$	(2,074)	(1,742)

Total income taxes paid were approximately $1,440, $950 and $3,310 in 2025, 2024 and 2023, respectively. Total taxes paid related to the sale of the Company's 40 percent noncontrolling common equity interest in Copeland were approximately $0.6 billion in 2025, while taxes related to the Copeland transaction in 2023 were $2.3 billion. See Notes 5 and 8. Approximately half of the $276 of net operating losses can be carried forward indefinitely, while most of the remainder expire over the next 5 years.