Income Taxes

9 Months Ended

Jul. 02, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The effective tax rates for the first nine months of fiscal 2023 and 2022 were 28.3% and 23.9%, respectively. Income tax expense was reduced by $2.2 million and $4.9 million of excess tax benefits on share-based payments in the first nine months of fiscal 2023 and 2022, respectively. In addition, income tax expense in the first nine months of fiscal 2023 included non-operating income tax expenses of $7.2 million ($6.9 million in the second quarter) to recognize the tax liability for foreign earnings, primarily in the U.K. and Australia, that are no longer indefinitely reinvested and to increase the liability for an uncertain tax position. Excluding the impact of the excess tax benefits on share-based payments and the non-operating tax expenses in the second and third quarter of fiscal 2023, our effective tax rates in the first nine months of fiscal 2023 and 2022 were 26.7% and 25.9%, respectively.

At July 2, 2023 and October 2, 2022, the liability for income taxes associated with uncertain tax positions was $48.8 million and $10.6 million, respectively. These liabilities could materially decrease within the next 12 months as some related examinations have commenced. These liabilities represent our current estimates of the additional tax liabilities that we may be assessed when the related audits are concluded. If these audits are resolved in a manner more unfavorable than our current expectations, our additional tax liabilities could be materially higher than the amounts currently recorded resulting in additional tax expense.