Note 5. Income Taxes (Notes)

9 Months Ended

Mar. 31, 2019

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

Income Taxes

On December 22, 2017, the Tax Cuts and Jobs Act (“Tax Act”) was signed into law. The Tax Act reduced federal corporate income tax rates effective January 1, 2018 and changed numerous other provisions. Because Kimball International has a June 30 fiscal year-end, the lower corporate federal income tax rate was phased in, resulting in a blended U.S. federal statutory tax rate of 28.1% for our fiscal year ended June 30, 2018, and 21% for fiscal year 2019. Prior to the effective date of the Tax Act, the U.S. federal statutory tax rate was 35%.

In determining the quarterly provision for income taxes, we use an estimated annual effective tax rate which is based on expected annual income, statutory tax rates, and available tax planning opportunities in the various jurisdictions in which we operate. Unusual or infrequently occurring items are separately recognized in the quarter in which they occur. Our effective tax rate was 24.1% and 24.7%, respectively, for the three and nine and months ended March 31, 2019, which was less than the combined federal and state statutory tax rate in part due to the R&D tax credit. Our effective tax rate was 31.2% and 35.3%, respectively, for the three and nine months ended March 31, 2018.