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Income Taxes
 12 Months Ended
Jun. 30, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income before income taxes was derived from the following sources:
202420232022
United States$2,120,257 $1,408,206 $646,364 
Foreign1,474,346 1,271,458 967,862 
$3,594,603 $2,679,664 $1,614,226 

Income taxes include the following:
202420232022
Federal
  Current$327,714 $161,465 $297,672 
  Deferred10,595 81,426 (253,123)
Foreign
  Current355,374 297,199 303,089 
  Deferred15,981 (13,509)(45,977)
State and local
  Current34,103 45,599 48,479 
  Deferred5,900 23,948 (52,100)
$749,667 $596,128 $298,040 

A reconciliation of the effective income tax rate to the statutory federal rate follows:
202420232022
Statutory federal income tax rate21.0 %21.0 %21.0 %
State and local income taxes0.9 2.1 (0.2)
Tax related to international activities2.3 1.2 2.7 
Cash surrender value of life insurance(0.1)(0.1)0.5 
Foreign derived intangible income deduction(1.5)(1.1)(3.7)
Research tax credit(0.6)(0.7)(0.8)
Share-based compensation(1.2)(1.0)(1.3)
Other0.1 0.8 0.3 
Effective income tax rate20.9 %22.2 %18.5 %

In December 2021, the Organization for Economic Cooperation and Development (OECD) published a framework, known as Pillar Two, defining a global minimum tax of 15 percent on large corporations. The OECD has since issued administrative guidance providing transition and safe harbor rules around the implementation of the Pillar Two global minimum tax. Several countries have proposed or enacted legislation to implement core elements of the Pillar Two proposal effective for years beginning after December 31, 2023, which for us is fiscal year 2025. While we are monitoring developments and evaluating the potential impact on future periods, we do not expect Pillar Two to have a significant impact on our 2025 consolidated financial statements. Future legislation and guidance may result in a change to our current assessment.


Deferred income taxes are provided for the temporary differences between the financial reporting basis and the tax basis of assets and liabilities. The differences comprising the net deferred taxes shown on the Consolidated Balance Sheet at June 30 were as follows:
20242023
Retirement benefits$123,951 $158,560 
Other liabilities and reserves213,866 240,821 
Long-term contracts45,279 37,747 
Stock-based compensation34,141 33,374 
Loss carryforwards1,063,837 1,083,732 
Inventory67,917 96,501 
Capitalized research and development145,697 92,191 
Tax credit carryforwards36,062 18,773 
Unrealized currency exchange gains and losses(18,302)(1,680)
Undistributed foreign earnings(30,468)(21,304)
Depreciation and amortization(2,103,689)(2,228,606)
Valuation allowance(1,069,510)(1,078,354)
Net deferred tax (liability)$(1,491,219)$(1,568,245)
Change in net deferred tax (liability):
Provision for deferred tax$(32,476)$(91,865)
Items of other comprehensive (loss) income(23,514)(64,342)
Acquisitions and other133,016 (1,215,579)
Total change in net deferred tax$77,026 $(1,371,786)

As of June 30, 2024, we recorded deferred tax assets of $1,064 million resulting from $4,443 million in loss carryforwards. A valuation allowance of $1,039 million related to the loss carryforwards has been established due to the uncertainty of their realization. Of this valuation allowance, $1,021 million relates to non-operating entities whose loss carryforward utilization is considered to be remote. Some of the loss carryforwards can be carried forward indefinitely; others can be carried forward from three years to 20 years. In addition, a valuation allowance of $30 million related to other future deductible items has been established due to the uncertainty of their realization.

Although future distributions of foreign earnings to the United States should not be subject to U.S. federal income taxes, other U.S. or foreign taxes may be imposed on such earnings. We have analyzed existing factors and determined we will no longer permanently reinvest certain foreign earnings. On these undistributed foreign earnings of approximately $1,006 million that are no longer permanently reinvested outside of the United States, we have recorded a deferred tax liability of $14 million. The remaining undistributed foreign earnings of approximately $1,133 million remain permanently reinvested outside the United States at June 30, 2024. Of these undistributed earnings, we have recorded a deferred tax liability of $16 million where certain foreign holding companies are not permanently reinvested in their subsidiaries. It is not practicable to estimate the additional taxes, including applicable foreign withholding taxes, that might be payable on the potential distribution of such permanently reinvested foreign earnings.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
202420232022
Balance July 1$113,503 $90,669 $100,759 
Additions for tax positions related to current year6,479 9,389 7,039 
Additions for tax positions of prior years— 6,171 1,415 
Additions for acquisitions4,195 25,957 — 
Reductions for tax positions of prior years(4,869)(3,063)(140)
Reductions for settlements— (6,923)(3,127)
Reductions for expiration of statute of limitations(15,019)(11,199)(6,647)
Effect of foreign currency translation(2,185)2,502 (8,630)
Balance June 30$102,104 $113,503 $90,669 

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $102 million, $114 million and $91 million as of June 30, 2024, 2023 and 2022, respectively. The accrued interest related to the gross unrecognized tax benefits, excluded from the amounts above, was $27 million, $21 million, and $18 million as of June 30, 2024, 2023 and 2022, respectively. The accrued penalties related to the gross unrecognized tax benefits, excluded from the amounts above, was $2 million as of both June 30, 2024 and 2023. There were no accrued penalties related to the gross unrecognized tax benefits as of June 30, 2022.

It is reasonably possible that, within the next 12 months, the amount of gross unrecognized tax benefits could be reduced by up to approximately $40 million as a result of the revaluation of existing uncertain tax positions arising from developments in the examination process or the closure of tax statutes. Any increase in the amount of unrecognized tax benefits within the next 12 months is expected to be insignificant.
We file income tax returns in the United States and in various foreign jurisdictions. In the normal course of business, we are subject to examination by taxing authorities throughout the world. We are open to assessment of our U.S. federal income tax returns by the Internal Revenue Service for years after 2013, and our state and local income tax returns for years after 2016. We are open to assessment for significant foreign jurisdictions for years after 2011.