Income Taxes

3 Months Ended

Jul. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Our consolidated interim effective tax rate is based on our expected annual operating income, statutory tax rates, and income tax laws in the various jurisdictions where we operate. Significant or unusual items, including adjustments to accruals for tax uncertainties, are recognized in the fiscal quarter in which the related event or a change in judgment occurs. The expected effective tax rate on ordinary income for the fiscal year is 21.5%, which is greater than the U.S. federal statutory rate of 21.0%, due to the effects of foreign operations and state taxes, partially offset by the impact of the foreign-derived intangible income deduction.

The effective tax rate of 22.9% for the three months ended July 31, 2023, is higher than the expected tax rate of 21.5% on ordinary income for the full fiscal year, primarily due to the impact of tax rate changes, which is partially offset by increased contingent tax liabilities and the reversal of a valuation allowance in the current period. The effective tax rate of 22.9% for the three months ended July 31, 2023, was lower than the effective tax rate of 23.6% for the same period last year, primarily due to decreased impact of state taxes, less benefit for the reversal of valuation allowances in the current period, and the beneficial impact of the foreign-derived intangible income deduction, which was partially offset by the impact of tax rate changes.