CMI · 10-Q · 2026Q3 · Full report

Income Tax Rate Changes

CUMMINS INC · 2026-11-05 · Importance 40 · Surprise 56

Effective tax rates were 17.7% for the third quarter and 22.8% for the first nine months of 2026, compared with 32.7% and 26.3%, respectively, in 2025. The third quarter of 2026 included $75 million of net favorable discrete tax items, including $38 million of favorable uncertain-tax-position adjustments and $37 million of favorable return-to-provision adjustments. Nine-month 2026 results included $53 million of net favorable discrete tax items, but also an unfavorable tax impact from the $199 million Accelera business-sale and customer-obligation charge, for which no tax benefit was recognized. The expected 2026 effective tax rate is approximately 23.0%, excluding discrete items and that unfavorable tax impact.

Key facts

• Cummins expects its 2026 effective tax rate to be approximately 23.0 percent, excluding discrete items and the unfavorable tax impact of the $199 million low-pressure fuel-cell sale and customer-obligation settlement loss, for which no tax benefit was recognized. source
• Cummins recorded $75 million of net favorable discrete tax items in the three months ended September 30, 2026, including $38 million of favorable uncertain-tax-position adjustments and $37 million of favorable return-to-provision adjustments. source
• Cummins recorded $53 million of net favorable discrete tax items in the nine months ended September 30, 2026, including $32 million of favorable uncertain-tax-position adjustments, $14 million of favorable return-to-provision adjustments and $7 million of other favorable discrete tax items. source
• Cummins' effective tax rates for the three and nine months ended September 30, 2026, were 17.7 percent and 22.8 percent, compared with 32.7 percent and 26.3 percent in the comparable 2025 periods. source