Income Taxes

3 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

9. Income Taxes

(in thousands)	Three months ended
	December 31, 2024			December 31, 2023
Income before income taxes	$	93,154		$	85,599
Provision for income taxes	$	10,922		$	19,212
Effective income tax rate		12	%		22	%

The effective tax rate for the three months ended December 31, 2024 was lower than the effective tax rate for the corresponding prior-year period primarily due to changes in the geographic mix of income before taxes. Additionally, for the three months ended December 31, 2024 and December 31, 2023, rates were impacted by a benefit of $5.4 million and an expense of $3.6 million, respectively, associated with the impact of tax reserves related to prior years in foreign jurisdictions.

In the normal course of business, PTC and its subsidiaries are examined by various taxing authorities, including the Internal Revenue Service in the U.S. We regularly assess the likelihood of additional assessments by tax authorities and provide for these matters as appropriate. We are currently under audit by tax authorities in several jurisdictions. Audits by tax authorities typically involve examination of the deductibility of certain permanent items, transfer pricing, limitations on net operating losses and tax credits.

As of December 31, 2024 and September 30, 2024, we had unrecognized tax benefits of $43.4 million and $65.0 million, respectively. If all our unrecognized tax benefits as of December 31, 2024 were to become recognizable in the future, we would record a benefit to the income tax provision of $43.4 million, which would be partially offset by an increase in the U.S. valuation allowance of $6.3 million.

Although we believe our tax estimates are appropriate, the final determination of tax audits and any related litigation could result in favorable or unfavorable changes in our estimates. We believe it is reasonably possible that within the next 12 months the amount of unrecognized tax benefits related to the resolution of multi-jurisdictional tax positions could be reduced by up to $5 million.