MILLERKNOLL, INC.

9. Income Taxes

The Company's process for determining the provision for income taxes for the three and nine months ended March 1, 2025, involved using an estimated annual effective tax rate which was based on expected annual income and statutory tax rates across the various jurisdictions in which it operates. The effective tax rates were 88.3% and 16.0%, respectively, for the three month periods ended March 1, 2025, and March 2, 2024. The year over year change in the effective tax rate for the three months ended March 1, 2025, resulted primarily from the current quarter having impacts of the estimated annual effective tax rate on the pre-tax loss driven by the impairment of indefinite-lived intangible assets and the prior year quarter having no comparable impacts. For the three months ended March 1, 2025, the effective tax rate is higher than the United States federal statutory rate due to the current quarter having impacts of the estimated annual effective tax rate on the pre-tax loss driven by the impairment of indefinite-lived intangible assets. For the three months ended March 2, 2024, the effective tax rate was lower than the United States federal statutory rate due to favorable discrete impacts from return to provision true-ups related to the United States research and development tax credit.

The effective tax rates were 139.5% and 20.5%, respectively, for the nine months ended March 1, 2025, and March 2, 2024. The year over year increase in the effective rate for the nine months ended March 1, 2025, resulted primarily from the current nine months having impacts of the estimated annual effective tax rate on the pre-tax loss driven by the impairment of indefinite-lived intangible assets and the prior year quarter having no comparable impacts. For the nine months ended March 1, 2025, the effective tax rate is higher than the United States federal statutory rate due to having impacts of the estimated annual effective tax rate on the pre-tax loss driven by the impairment of indefinite-lived intangible assets. For the nine months ended March 2, 2024, the effective tax rate is slightly lower than the United States federal statutory rate due to favorable discrete impacts from return to provision true-ups related to the United States research and development tax credit.

The Company recognizes interest and penalties related to uncertain tax benefits through Income tax expense in its Condensed Consolidated Statements of Comprehensive Income. Interest and penalties recognized in the Company's Condensed Consolidated Statements of Comprehensive Income were negligible for the three and nine months ended March 1, 2025, and March 2, 2024.

The Company's recorded liability for potential interest and penalties related to uncertain tax benefits was:

The Company is subject to periodic audits by domestic and foreign tax authorities. Currently, the Company is undergoing routine periodic audits in both domestic and foreign tax jurisdictions. It is reasonably possible that the amounts of unrecognized tax benefits could change in the next twelve months as a result of these audits. Tax payments related to these audits, if any, are not expected to be material to the Company's Condensed Consolidated Statements of Comprehensive Income.

For the majority of tax jurisdictions, the Company is no longer subject to state, local, or non-United States income tax examinations by tax authorities for fiscal years before 2019.