INCOME TAXES (Tables)

12 Months Ended

Aug. 31, 2025

Schedule of Components of Provision for Income Taxes

The provision for income taxes and the effective tax rate are as follows:


(in thousands)	Years ended August 31,
	2025			2024			2023
U.S. operations	$	479,288		$	416,093		$	382,702
Non-U.S. operations	241,670			235,410			201,252
Income before income taxes	$	720,958		$	651,503		$	583,954

U.S. operations	$	45,591		$	55,219		$	54,337
Non-U.S. operations	78,327			59,158			61,444
Provision for income taxes	$	123,918		$	114,377		$	115,781

Effective tax rate	17.2		%	17.6		%	19.8		%

The components of the provision for income taxes consist of the following:


(in thousands)	Years ended August 31,
	2025		2024		2023
Current
U.S. federal	$	16,255	$	46,903	$	38,625
U.S. state and local	27,594		40,926		38,600
Non-U.S.	83,614		58,568		69,675
Total current taxes	$	127,463	$	146,397	$	146,900

Deferred
U.S. federal	$	(1,132)	$	(26,962)	$	(17,235)
U.S. state and local	2,875		(5,648)		(5,652)
Non-U.S.	(5,288)		590		(8,232)
Total deferred taxes	$	(3,545)	$	(32,020)	$	(31,119)
Provision for income taxes	$	123,918	$	114,377	$	115,781

Schedule of Reconciliation of Effective Tax Rate

The following table presents a reconciliation between the U.S. corporate income tax rate and our effective tax rate:


	Years ended August 31,
(expressed as a percentage of income before income taxes)	2025		2024		2023
Tax at U.S. Federal statutory tax rate	21.0	%	21.0	%	21.0	%
Increase (decrease) in taxes resulting from:
State and local taxes, net of U.S. federal income tax benefit	3.1		2.2		3.1
Foreign income at other than U.S. rates	1.7		1.5		(0.1)
Foreign derived intangible income ("FDII") tax deduction	(2.0)		(2.3)		(1.6)
Income tax benefits from research and development ("R&D") tax credits	(3.1)		(2.8)		(3.8)
Stock-based payments	(1.4)		(2.1)		(2.2)

U.S. impact of foreign income	(3.1)		(2.5)		(0.6)
Uncertain tax positions	1.4		2.3		0.5
One-time adjustment(1)	—		—		3.8
Other, net	(0.4)		0.3		(0.3)
Effective tax rate	17.2	%	17.6	%	19.8	%

(1) During fiscal 2023, we recorded an out-of-period adjustment related to a review and analysis of certain tax positions, resulting in a one-time net charge. The adjustment related to the accounting of tax balance sheet accounts. All local, federal and foreign taxes payable have been paid in a timely manner, subject to normal audits of open years.

Schedule of Significant Components of Deferred Tax Assets and Liabilities

We recognize deferred income taxes to reflect the temporary differences between the financial statement carrying amounts of assets and liabilities and their corresponding tax basis. The tax effects of these differences are as follows:


(in thousands)	As of August 31,
	2025		2024
Deferred tax assets:
Lease liabilities	$	35,352	$	41,373
Stock-based compensation	36,675		35,615

Capitalization of R&D costs	143,829		109,664
Sales Tax Dispute	—		14,058
Other	39,793		28,154
Total deferred tax assets	$	255,649	$	228,864

Deferred tax liabilities:
Depreciation on PPE	$	(41,432)	$	(35,666)
Purchased intangible assets, including acquired technology	(141,566)		(106,131)
Lease ROU assets	(18,184)		(24,429)
Other	(5,393)		(9,753)
Total deferred tax liabilities	$	(206,575)	$	(175,979)
Deferred tax assets (liabilities), net	$	49,074	$	52,885
Valuation allowance	(2,750)		—
Total deferred tax assets (liabilities), net	$	46,324	$	52,885

Total deferred tax assets and liabilities recorded within the Consolidated Balance Sheets were as follows:


(in thousands)	As of August 31,
(in thousands)	2025		2024
Deferred tax assets	$	61,226	$	61,337
Deferred tax liabilities	(14,902)		(8,452)
Total deferred tax assets (liabilities), net	$	46,324	$	52,885

Schedule of Reconciliation of Unrecognized Tax Benefits

The following table summarizes the changes in the balance of gross unrecognized tax benefits:


(in thousands)
Unrecognized tax benefits as of August 31, 2022	$	20,171
Additions based on tax positions related to the current year	4,372

Release for tax positions of prior years	(3,490)

Unrecognized tax benefits as of August 31, 2023	$	21,053
Additions based on tax positions related to the current year	6,068
Additions for tax positions related to prior years(1)	11,726
Release for tax positions of prior years	(3,557)

Unrecognized tax benefits as of August 31, 2024	$	35,290
Additions based on tax positions related to the current year	5,344
Additions for tax positions related to prior years(1)	2,368
Release for tax positions of prior years	(3,568)
Unrecognized tax benefits as of August 31, 2025	$	39,434

(1) Additions for tax positions related to prior years was presented separately in fiscal 2025. Comparative figures for fiscal 2024 have been conformed. There were no such amounts in fiscal 2023.

Schedule of Major Tax Jurisdictions in Which the Company and Affiliates Operate and the Earliest Tax Year Subject to Examination

As of August 31, 2025, we remained subject to examination in the following significant tax jurisdictions for the fiscal years as indicated below:


Significant Tax Jurisdiction	Open Tax Fiscal Years
U.S.
Federal	2019	through	2024
State (various)	2019	through	2024

Non-U.S.
United Kingdom	2021	through	2024
India	2022	through	2024

FACTSET RESEARCH SYSTEMS INC 10-K