CAT · 10-Q · 2026Q2 · Full report

Income Tax Rate Changes

CATERPILLAR INC · 2026-08-05 · Importance 16 · Surprise 24 · In source text

The second-quarter 2026 effective tax rate was 23.1%, compared with 23.0% in the second quarter of 2025. The six-month effective tax rate declined to 22.2% from 22.6%, aided by a $94 million discrete tax benefit versus an $18 million benefit in the prior-year period. The 2026 discrete benefit resulted from stock-based compensation settlements producing tax deductions above cumulative U.S. GAAP compensation expense. Caterpillar expects a 23.0% annual effective tax rate for 2026 excluding discrete items, while the $139 million divestiture loss generated no related tax benefit.

Key facts

• Annual effective tax rate, excluding discrete items for the six months ended June 30, 2026 was 23.0% (profit before taxes $7,908 million and provision for income taxes $1,819 million). source
• Three months ended June 30, 2026 profit before taxes (U.S. GAAP) was $4,558 million and provision for income taxes was $1,055 million, a 23.1% effective tax rate. source
• Company anticipates estimated annual effective tax rate of 23.0% in 2026, excluding discrete items. source
• A discrete tax benefit of $26 million was recorded in Q2 2026 for settlement of stock-based compensation awards, compared with a $1 million benefit in Q2 2025. source
• Effective tax rate for Q2 2026: 23.1%, compared to 23.0% for Q2 2025; estimated annual effective tax rate excluded certain items was 23.0% for both Q2 2026 and Q2 2025. source

Impact estimates