

	2020		2019		2018
Components of income before income taxes:
United States	$	556.2	$	280.8	$	721.6
Non-United States	579.9		620.2		609.2
Total	$	1,136.1	$	901.0	$	1,330.8



Components of the income tax provision:
Current:
United States	$	68.1		$	105.6		$	475.3
Non-United States	96.6			112.1			131.4
State and local	13.9			16.5			18.1
Total current	178.6			234.2			624.8
Deferred:
United States	(32.8		)	(27.0		)	118.6
Non-United States	(24.7		)	(0.1		)	48.0
State and local	(8.2		)	(1.9		)	3.9
Total deferred	(65.7		)	(29.0		)	170.5
Income tax provision	$	112.9		$	205.2		$	795.3

Total income taxes paid	$	187.9		$	293.3		$	222.9



	2020		2019		2018
Statutory tax rate	21.0	%	21.0	%	24.5	%
State and local income taxes	0.8		0.1		1.0
Non-United States taxes	(5.2	)	(4.8	)	(4.4	)
Repatriation of foreign earnings	1.3		2.8		4.2
Foreign-derived intangible income	(1.0	)	(1.6	)	—
Impact of the Tax Act	—		—		36.6
Sensia formation	(1.1	)	—		—
Change in valuation allowance^(a)	(2.7	)	7.6		0.7
Share-based compensation	(1.9	)	(0.9	)	(1.3	)
Research and development tax credit	(1.1	)	(1.2	)	(1.3	)
Other	(0.2	)	(0.2	)	(0.2	)
Effective income tax rate	9.9	%	22.8	%	59.8	%

^(a) During fiscal year 2020, we reversed a portion of our valuation allowance against deferred tax assets associated with the change in fair value of the PTC Shares. This resulted in a decrease to the effective tax rate of 2.7% and a corresponding valuation allowance of $30.1 million, as described further in the table below.

We operate in certain non-U.S. tax jurisdictions under government-sponsored tax incentive programs. The program which generates the primary benefit has been extended, conditional upon meeting certain additional requirements, to 2032. The tax benefit attributable to these programs was $59.1 million ($0.51 per diluted share) in 2020, $55.1 million ($0.46 per diluted share) in 2019 and $52.3 million ($0.41 per diluted share) in 2018.



	2020			2019
Deferred income tax assets:
Compensation and benefits	$	6.0		$	6.0
Inventory	10.5			11.1
Returns, rebates and incentives	34.5			29.8
Retirement benefits	306.8			298.5
Environmental remediation and other site-related costs	23.8			26.2
Share-based compensation	18.6			21.6
Other accruals and reserves	68.4			46.9
Investments	31.6			69.6
Net operating loss carryforwards	31.1			18.5
Tax credit carryforwards	17.3			16.5
Capital loss carryforwards	10.8			9.5
Other	16.8			10.7
Subtotal	576.2			564.9
Valuation allowance	(58.0		)	(93.8		)
Net deferred income tax assets	518.2			471.1
Deferred income tax liabilities:
Property	(48.0		)	(55.8		)
Intangible assets	(25.3		)	(24.4		)
Unremitted earnings of foreign subsidiaries	(28.3		)	(25.5		)
Other	(1.0		)	(1.3		)
Deferred income tax liabilities	(102.6		)	(107.0		)
Total net deferred income tax assets	$	415.6		$	364.1

We believe it is more likely than not that we will realize our deferred tax assets through the reduction of future taxable income, other than for the deferred tax assets reflected below.



Tax attributes and related valuation allowances	Tax Benefit Amount		Valuation Allowance		Carryforward Period Ends
Non-United States net operating loss carryforward	$	19.0	$	5.8	2021	-	2030
Non-United States net operating loss carryforward	4.9		4.0		Indefinite
Non-United States capital loss carryforward	10.8		10.8		Indefinite
United States credit carryforward	1.1		1.1		2021		2030
United States net operating loss carryforward	0.3		—		2021	-	2036
State and local net operating loss carryforward	6.9		1.4		2021	-	2038
State tax credit carryforward	16.2		0.7		2021	-	2035
Subtotal	59.2		23.8
Other deferred tax assets	34.2		34.2		Indefinite
Total	$	93.4	$	58.0



	2020		2019			2018
Gross unrecognized tax benefits balance at beginning of year	$	19.9	$	20.1		$	31.1
Additions based on tax positions related to the current year	—		—			—
Additions based on tax positions related to prior years	5.6		—			3.0
Reductions based on tax positions related to prior years	—		—			(1.1		)
Reductions related to settlements with taxing authorities	—		—			(11.3		)
Reductions related to lapses of statute of limitations	—		(0.2		)	(1.6		)
Effect of foreign currency translation	—		—			—
Gross unrecognized tax benefits balance at end of year	$	25.5	$	19.9		$	20.1

The amount of gross unrecognized tax benefits that would reduce our effective tax rate if recognized was $25.5 million, $19.9 million and $20.1 million at September 30, 2020, 2019 and 2018, respectively.

Accrued interest and penalties related to unrecognized tax benefits were $4.0 million and $3.3 million at September 30, 2020 and 2019, respectively. We recognize interest and penalties related to unrecognized tax benefits in the income tax provision. Benefits (expense) recognized were ($0.7) million, ($0.8) million and $1.5 million in 2020, 2019 and 2018, respectively.

We believe it is reasonably possible that the amount of gross unrecognized tax benefits could be reduced by up to $24.6 million in the next 12 months as a result of the resolution of tax matters in various global jurisdictions and the lapses of statutes of limitations. If all of the unrecognized tax benefits were recognized, the net reduction to our income tax provision, including the recognition of interest and penalties and offsetting tax assets, could be up to $26.8 million.

We conduct business globally and are routinely audited by the various tax jurisdictions in which we operate. We are no longer subject to U.S. federal income tax examinations for years before 2016 and are no longer subject to state, local and non-U.S. income tax examinations for years before 2009.

Income tax liabilities of $296.0 million and $327.2 million related to the U.S. transition tax under the Tax Act that are payable greater than 12 months from September 30, 2020, and 2019, respectively, are recorded in other liabilities in the Consolidated Balance Sheet.