ITW · 10-Q · 2026Q2 · Full report

Income Tax Rate Changes

ILLINOIS TOOL WORKS INC · 2026-08-06 · Importance 28 · Surprise 42

ITW recorded a $34 million discrete tax benefit in the first quarter of 2026, primarily related to resolution of a U.S. tax audit. Excluding that benefit, the effective tax rate for the six months ended June 30, 2026 was 24.3%, compared with a reported rate of 22.6%. The comparable 2025 period included a $21 million benefit from reversal of a valuation allowance on net operating loss carryforwards and had an adjusted tax rate of 24.2%.

Key facts

• The Company's effective tax rate for the year-to-date periods was 22.6% in 2026 and 23.1% in 2025, with the 2026 year-to-date rate including a discrete tax benefit of $34 million in the first quarter of 2026. source
• As adjusted income tax rate for the six months ended June 30, 2026 excluding the first quarter 2026 discrete tax benefit: 24.3%. source
• As adjusted income tax rate for the six months ended June 30, 2025 excluding the first quarter 2025 discrete tax benefit: 24.2%. source
• The Company's effective tax rate for the second quarter of 2026 and 2025 was 24.4% in both periods. source
• Effective tax rate used for interest expense and other (income) expense for the three months ended June 30, 2026 and 2025 was 24.4% in both periods. source