EMERSON ELECTRIC COEMR
EMERSON ELECTRIC CO Income Taxes Disclosure
INCOME TAXES
Total income taxes paid were approximately $1,440, $950 and $3,310 in 2025, 2024 and 2023, respectively. Total taxes paid related to the sale of the Company's 40 percent noncontrolling common equity interest in Copeland were approximately $0.6 billion in 2025, while taxes related to the Copeland transaction in 2023 were $2.3 billion. See Notes 5 and 8. Approximately half of the $276 of net operating losses can be carried forward indefinitely, while most of the remainder expire over the next 5 years.
Pretax earnings from continuing operations consist of the following:
| 2023 | 2024 | 2025 | |||||||||||||||
| United States | $ | 1,529 | 712 | 1,118 | |||||||||||||
| Non-U.S. | 1,374 | 1,308 | 1,816 | ||||||||||||||
| Total pretax earnings | $ | 2,903 | 2,020 | 2,934 | |||||||||||||
The principal components of income tax expense follow:
| 2023 | 2024 | 2025 | |||||||||||||||
| Current: | |||||||||||||||||
| U.S. federal | $ | 463 | 325 | 463 | |||||||||||||
| State and local | 47 | 34 | 56 | ||||||||||||||
| Non-U.S. | 369 | 452 | 481 | ||||||||||||||
| Deferred: | |||||||||||||||||
| U.S. federal | (159) | (284) | (212) | ||||||||||||||
| State and local | (17) | (18) | 11 | ||||||||||||||
| Non-U.S. | (61) | (94) | (103) | ||||||||||||||
| Income tax expense | $ | 642 | 415 | 696 | |||||||||||||
Reconciliations of the U.S. federal statutory income tax rate to the Company's effective tax rate follow.
| 2023 | 2024 | 2025 | |||||||||||||||
| U.S. federal statutory rate | 21.0 | % | 21.0 | % | 21.0 | % | |||||||||||
| State and local taxes, net of U.S. federal tax benefit | 0.8 | 0.6 | 1.8 | ||||||||||||||
| Non-U.S. rate differential | 0.8 | 2.0 | 1.2 | ||||||||||||||
| Non-U.S. tax holidays | (0.8) | (1.7) | (1.3) | ||||||||||||||
| Research and development credits | (0.5) | (1.2) | (0.9) | ||||||||||||||
| Foreign derived intangible income | (2.6) | (3.8) | (2.0) | ||||||||||||||
| U.S. taxation of Non-U.S. Earnings | 1.3 | 2.1 | 1.7 | ||||||||||||||
| Subsidiary restructuring | — | (2.9) | (0.2) | ||||||||||||||
| Test & Measurement purchase accounting | — | 1.7 | — | ||||||||||||||
| Other | 2.1 | 2.8 | 2.4 | ||||||||||||||
| Effective income tax rate | 22.1 | % | 20.6 | % | 23.7 | % | |||||||||||
State and local taxes in 2025 include a discrete deferred expense due to the purchase of the remaining shares of AspenTech. Test & Measurement purchase accounting in 2024 reflects a lower tax benefit on inventory step-up amortization. The increase in Other in 2024 includes the losses on two small divestitures, which were non-deductible for tax purposes. See Note 4 for further details related to acquisitions and divestitures.
On July 4, 2025, the One Big Beautiful Bill Act (the "OBBBA") was signed into law. The OBBBA extends certain key elements of the 2017 Tax Cuts and Jobs Act including provisions related to bonus depreciation and domestic research and development, among others. The OBBBA did not have a material impact in the current fiscal year. The Company is currently assessing the impact of the OBBBA on future periods.
Non-U.S. tax holidays reduce tax rates in certain jurisdictions. Approximately 60 percent of the tax holidays expire over the next two years, with the remainder expiring by 2038.
Following are changes in unrecognized tax benefits before considering recoverability of any cross-jurisdictional tax credits (U.S. federal, state and non-U.S.) and temporary differences. The amount of unrecognized tax benefits is not expected to change significantly in the next 12 months.
| 2024 | 2025 | ||||||||||
| Unrecognized tax benefits, beginning | $ | 235 | 291 | ||||||||
| Additions for current year tax positions | 59 | 24 | |||||||||
| Additions for prior year tax positions | 18 | 12 | |||||||||
| Reductions for prior year tax positions | (22) | (26) | |||||||||
| Acquisitions and divestitures | 13 | — | |||||||||
| Reductions for settlements with tax authorities | (7) | (8) | |||||||||
| Reductions for expiration of statutes of limitations | (5) | (5) | |||||||||
| Unrecognized tax benefits, ending | $ | 291 | 288 | ||||||||
If none of the unrecognized tax benefits shown is ultimately paid, the tax provision and the calculation of the effective tax rate would be favorably impacted by $245, which is net of cross-jurisdictional tax credits and temporary differences. The Company accrues interest and penalties related to income taxes in income tax expense. Total expense recognized was $6, $6 and $1 in 2025, 2024 and 2023, respectively. As of September 30, 2025 and 2024, total accrued interest and penalties were $46 and $27, respectively.
The U.S. is the major jurisdiction for which the Company files income tax returns. Examinations for U.S. federal are complete through 2019. The status of state and non-U.S. tax examinations varies due to the numerous legal entities and jurisdictions in which the Company operates.
The principal items that gave rise to deferred income tax assets and liabilities follow:
| 2024 | 2025 | ||||||||||
| Deferred tax assets: | |||||||||||
| Net operating losses, capital losses and tax credits | $ | 283 | 276 | ||||||||
| Accrued liabilities | 149 | 149 | |||||||||
| Postretirement and postemployment benefits | 17 | 13 | |||||||||
| Employee compensation and benefits | 121 | 122 | |||||||||
| Other | 176 | 249 | |||||||||
| Total | $ | 746 | 809 | ||||||||
| Valuation allowances | $ | (256) | (251) | ||||||||
| Deferred tax liabilities: | |||||||||||
| Intangibles | $ | (2,161) | (1,871) | ||||||||
| Pensions | (193) | (195) | |||||||||
| Property, plant and equipment | (121) | (149) | |||||||||
| Undistributed non-U.S. earnings | (36) | (34) | |||||||||
| Other | (53) | (51) | |||||||||
| Total | $ | (2,564) | (2,300) | ||||||||
| Net deferred income tax liability | $ | (2,074) | (1,742) | ||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Nov 10, 2025 | Showing above |
| 2024 | Nov 12, 2024 | |
| 2023 | Nov 13, 2023 | |
| 2022 | Nov 14, 2022 | |
| 2021 | Nov 15, 2021 | |
| 2020 | Nov 16, 2020 | |
| 2019 | Nov 18, 2019 | |
| 2018 | Nov 19, 2018 | |
| 2017 | Nov 20, 2017 | |
| 2016 | Nov 16, 2016 | |
| 2015 | Nov 18, 2015 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.