CAT · 10-Q · 2026Q3 · Full report

Income Tax Rate Changes

CATERPILLAR INC · 2026-11-04 · Importance 36 · Surprise 40

The third-quarter 2026 effective tax rate was 22.9%, down from 26.7% in third-quarter 2025; excluding discrete items, the estimated annual rate declined to 23.0% from 24.0%. For the first nine months, the effective tax rate was 22.5% versus 24.1%, while the estimated annual rate excluding discrete items was 23.0% versus 24.0%. Nine-month 2026 included a $97 million discrete tax benefit from stock-based compensation awards, while the 2025 period included a $41 million discrete tax charge related to prior-year estimate changes.

Key facts

• Caterpillar anticipates an estimated annual effective tax rate of 23.0% in 2026, excluding discrete items. source
• A discrete tax benefit of $97 million was recorded in the nine months ended September 30, 2026, compared with $28 million in the comparable 2025 period. source
• Caterpillar's 2026 estimated annual effective tax rate excluded the impact of $139 million of divestiture losses on certain non-U.S. entities with no related tax benefit. source
• Excluding discrete items, the estimated annual effective tax rate was 23.0% for third-quarter 2026, compared with 24.0% for third-quarter 2025. source
• The effective tax rate for third-quarter 2026 was 22.9%, compared with 26.7% for third-quarter 2025. source