Taxes on Earnings

9 Months Ended

Jul. 31, 2024

Income Tax Disclosure [Abstract]

Taxes on Earnings

Taxes on Earnings

Provision for Taxes

HP’s effective tax rate was 22.6% and 18.2% for the three months ended July 31, 2024 and 2023, respectively and 22.7% and (9.8)% for the nine months ended July 31, 2024 and 2023, respectively. The difference between the U.S. federal statutory tax rate of 21% and HP’s effective tax rate for the three months ended July 31, 2023 was primarily due to favorable tax rates associated with certain earnings from HP’s operations in lower-tax jurisdictions throughout the world. For the nine months ended July 31, 2023, the difference was primarily due to tax effects of internal reorganization.

During the three and nine months ended July 31, 2024, HP recorded $3 million of net income tax charges and $14 million of net income tax benefits, respectively, related to discrete items in the provision for taxes. The nine months ended July 31, 2024 included benefits of $17 million related to the filing of tax returns in various jurisdictions. The three and nine months ended July 31, 2024 also included benefits of $10 million and $36 million related to restructuring charges, respectively. These benefits were partially offset by income tax charges of $19 million and $46 million related to uncertain tax positions for the three and nine months ended July 31, 2024, respectively.

During the three and nine months ended July 31, 2023, HP recorded $32 million and $724 million, respectively of net income tax benefits related to discrete items in the provision for taxes. The nine months ended July 31, 2023 included benefits of $697 million related to tax effects of internal reorganization. The three and nine months ended July 31, 2023 also included benefits of $16 million and $82 million related to restructuring charges, $51 million and $15 million related to the filing of tax returns in various jurisdictions, and $10 million and $37 million related to acquisition and divestiture charges, respectively. These benefits were partially offset by income tax charges of $2 million and $60 million related to audit settlements in various jurisdictions, $17 million and $32 million of uncertain tax position charges, and $27 million and $25 million related to extinguishment of debt for the three and nine months ended July 31, 2023, respectively.

Uncertain Tax Positions

As of July 31, 2024, the amount of gross unrecognized tax benefits was $1.2 billion, of which up to $867 million would affect HP’s effective tax rate if realized. Total gross unrecognized tax benefits increased by $43 million for the nine months ended July 31, 2024. HP recognizes interest income from favorable settlements and interest expense and penalties accrued on unrecognized tax benefits in the provision for taxes in the Consolidated Condensed Statements of Earnings. As of July 31, 2024 and 2023, HP had accrued $130 million and $98 million, respectively, for interest and penalties.

HP engages in continuous discussions and negotiations with taxing authorities regarding tax matters in various jurisdictions. HP expects complete resolution of certain tax years with various tax authorities within the next 12 months. HP believes it is reasonably possible that its existing gross unrecognized tax benefits may be reduced by $21 million within the next 12 months, affecting HP’s effective tax rate if realized.

HP is subject to income tax in the United States and approximately 60 other countries and is subject to routine corporate income tax audits in many of these jurisdictions. In addition, HP is subject to numerous ongoing audits by federal, state and foreign tax authorities. The Internal Revenue Service (“IRS”) is conducting an audit of HP’s 2018 and 2019 income tax returns.