Income Taxes

3 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Note 13. Income Taxes

The components of income before income taxes are as follows (dollars in thousands):

	Three Months Ended December 31,
	2021		2020
Domestic	$	17,208	$	3,314
Foreign		2,135		8,212
Income before income taxes	$	19,343	$	11,526

The components of the provision for (benefit from) income taxes are as follows (dollars in thousands):

	Three Months Ended December 31,
	2021			2020
Domestic	$	1,437		$	(438	)
Foreign		(1,138	)		(8,977	)
Provision for (benefit from) income taxes	$	299		$	(9,415	)
Effective income tax rate		1.5	%		(81.7	)%

The effective tax rates for the periods presented are based upon estimated income for the fiscal year and the statutory tax rates enacted in the jurisdictions in which we operate. For all periods presented, the effective tax rate differs from the 21.0% statutory U.S. tax rate due to the impact of the nondeductible stock-based compensation and our mix of jurisdictional earnings and related differences in foreign statutory tax rates.

Our effective tax rate for the three months ended December 31, 2021 was 1.5% compared to negative 81.7% for the three months ended December 31, 2020. Consequently, our provision for income taxes for the three months ended December 31, 2021 was $0.3 million, a net change of $9.7 million from a benefit from income taxes of $9.4 million for the three months ended December 31, 2020. This difference was attributable to our composition of jurisdiction earnings, U.S. inclusions of foreign taxable income as a result of 2017 tax law changes, and a $15.8 million tax benefit recorded as a result of an increase to the enacted Netherlands tax rate in the first quarter of fiscal 2021 partially offset by a $3.5 million tax benefit recorded as result of an increase to the enacted Netherlands tax rate in the first quarter of fiscal 2022.

Deferred tax assets and liabilities are measured using the statutory tax rates and laws expected to apply to taxable income in the years in which the temporary differences are expected to reverse. Valuation allowances are provided against net deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and the timing of the temporary differences becoming deductible. Management considers, among other available information, scheduled reversals of deferred tax liabilities, projected future taxable income, limitations of availability of net operating loss carryforwards, and other matters in making this assessment.