CMI · 10-Q · 2026Q2 · Full report

Income Tax Rate Changes

CUMMINS INC · 2026-08-04 · Importance 25 · Surprise 32 · In source text

The effective tax rate was 25.1% in the second quarter of 2026 and 26.0% for the first six months, compared with 24.2% and 24.1% in the prior-year periods. Second-quarter tax expense included $29 million of unfavorable discrete items, consisting primarily of $17 million of return-to-provision adjustments and $12 million of other unfavorable items. The first half included an unfavorable tax impact from the $199 million fuel-cell transaction charge because no tax benefit was recognized, plus $22 million of other net unfavorable discrete items. Management expects the full-year 2026 effective tax rate to be approximately 23.0%, excluding future discrete items.

Key facts

• Effective tax rate for 2026 is expected to approximate 23.0 percent, excluding discrete items source
• Six months ended June 30, 2026 had unfavorable discrete tax impact due to the $199 million loss on sale of business and settlement for which no tax benefit was recognized and other net unfavorable discrete items of $22 million (including $23 million unfavorable return to provision adjustments) source
• Three months ended June 30, 2026 contained net unfavorable discrete tax items of $29 million (including $17 million unfavorable return to provision adjustments and $12 million other) source
• Effective tax rates for the three and six months ended June 30, 2026 were 25.1% and 26.0%, respectively source

Impact estimates