Company: ROK
Filing Date: 2025-11-12
Form Type: 10-K
Source: 0001024478-25-000116
Chunk: 271

Company: ROCKWELL AUTOMATION, INC
Filing Date: 2025-11-12
Form: 10-K
Item: Item 7
Chunk 271
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Income before Income Taxes

Income before income taxes decreased to $917 million in 2025 from $1,100 million in 2024. The decrease was primarily due to higher compensation, the non-cash impairment charge related to the Sensia joint venture, and an accounting change and accrual increase for legacy asbestos liabilities, partially offset by productivity, price realization, and prior year restructuring charges. Total segment operating earnings increased to $1,703 million from $1,595 million in 2024, primarily due to productivity, higher sales driven by price realization, and favorable mix, partially offset by higher compensation and unfavorable net currency.

Income Taxes

The effective tax rate in 2025 was 18.3 percent compared to 13.8 percent in 2024. The increase in the effective tax rate is related to valuation allowances and tax effects from the non-cash impairment charge for the Sensia joint venture and higher discrete tax benefits in 2024 as compared to 2025.  The Adjusted Effective Tax Rate in 2025 was 17.1 percent compared to 15.3 percent in 2024. The increase in the Adjusted Effective Tax Rate was primarily due to higher discrete tax benefits in 2024 as compared to 2025.

See Note 16 in the Consolidated Financial Statements for a complete reconciliation of the United States statutory tax rate to the effective tax rate and additional information on tax events in 2025 and 2024 affecting each year’s respective tax rates.

In October 2021, the Organization for Economic Cooperation and Development (OECD) and G20 Finance Ministers reached an agreement, known as Base Erosion and Profit Shifting (BEPS) Pillar Two, that, among other things, ensures that income earned in each jurisdiction that qualifying multinational enterprises operate in is subject to a minimum corporate income tax rate of at least 15 percent. Discussions related to the formal implementation and enactment of this agreement, including within the tax law of each member jurisdiction including the United States, are ongoing. Certain countries have enacted the Pillar Two framework, including Singapore, which is expected to result in the greatest impact to the Company. Enactment of this regulation in its current form would generally apply to the Company beginning in fiscal year 2026, resulting in an approximate increase in our effective tax rate of 3 percent as well as in the amount of global corporate income tax paid. 

In addition to BEPS Pillar Two, other items could also affect our effective tax rate, many