BJ's Wholesale Club Holdings, Inc.BJ
BJ's Wholesale Club Holdings, Inc. Income Taxes Disclosure
Income Taxes
The provision for income taxes from continuing operations includes the following (in thousands):
| Fiscal Year Ended | |||||||||||||||||
| January 31, 2026 | February 1, 2025 | February 3, 2024 | |||||||||||||||
| Federal: | |||||||||||||||||
| Current | $ | 126,475 | $ | 146,882 | $ | 126,805 | |||||||||||
| Deferred | 5,272 | (15,603) | 18,024 | ||||||||||||||
| State: | |||||||||||||||||
| Current | 61,520 | 58,041 | 59,863 | ||||||||||||||
| Deferred | 2,567 | (2,890) | 7,548 | ||||||||||||||
| Total income tax provision | $ | 195,834 | $ | 186,430 | $ | 212,240 | |||||||||||
A reconciliation of the statutory federal income tax rate with the Company’s effective income tax rate is as follows:
| Fiscal Year Ended | ||||||||||||||||||||||||||
| January 31, 2026 | February 1, 2025 | February 3, 2024 | ||||||||||||||||||||||||
| Statutory federal income tax rates | $ | 162,584 | 21.0 | % | $ | 151,378 | 21.0 | % | $ | 154,563 | 21.0 | % | ||||||||||||||
| Domestic federal reconciling items: | ||||||||||||||||||||||||||
| Tax credits | (2,927) | (0.4) | (2,363) | (0.3) | (3,407) | (0.5) | ||||||||||||||||||||
| Nontaxable and nondeductible items, net | ||||||||||||||||||||||||||
| Share-based payment awards | (8,879) | (1.1) | (11,834) | (1.6) | (4,414) | (0.6) | ||||||||||||||||||||
Gains on transferable tax credits(a) | (8,705) | (1.1) | — | — | — | — | ||||||||||||||||||||
| Other nontaxable and nondeductible items, net | 6,262 | 0.8 | 7,092 | 1.0 | 14,507 | 2.0 | ||||||||||||||||||||
Changes in unrecognized tax benefits(b) | 14 | 0.0 | (56) | 0.0 | (10) | 0.0 | ||||||||||||||||||||
| Other | (3,242) | (0.4) | (1,357) | (0.2) | (2,263) | (0.3) | ||||||||||||||||||||
Domestic state and local income taxes, net of federal effect(c) | 50,727 | 6.5 | 43,570 | 6.0 | 53,264 | 7.2 | ||||||||||||||||||||
| Effective income tax | $ | 195,834 | 25.3 | % | $ | 186,430 | 25.9 | % | $ | 212,240 | 28.8 | % | ||||||||||||||
(a) The domestic federal income tax benefit associated with the discount on transferable tax credits is included herein.
(b) The Company has elected to classify interest and penalties as income taxes as permitted by ASC 740-10-45-25. The related amounts recognized are included herein.
(c) The jurisdictions that contribute to the majority of the tax effect in this category are New York, New Jersey, Massachusetts, and Florida.
Cash taxes paid may vary from the income tax expense reported in the consolidated statements of operations and comprehensive income due to differences between the timing of tax payments and the recognition of tax expense, the impact of deferred taxes, changes in tax reserves, and other non-cash tax items.
The table below presents the income taxes paid, net of refunds received, by jurisdiction (in thousands):
| Fiscal Year Ended | |||||||||||||||||
| January 31, 2026 | February 1, 2025 | February 3, 2024 | |||||||||||||||
US federal income taxes paid(a) | $ | 99,900 | $ | 139,100 | $ | 127,500 | |||||||||||
| US state and local income taxes paid | |||||||||||||||||
| New York | 12,300 | 10,600 | 11,100 | ||||||||||||||
| New Jersey | 11,000 | * | * | ||||||||||||||
| Massachusetts | * | * | 11,700 | ||||||||||||||
| Other | 41,200 | 41,670 | 48,259 | ||||||||||||||
| Total US state and local income taxes paid | 64,500 | 52,270 | 71,059 | ||||||||||||||
| Total income taxes paid | $ | 164,400 | $ | 191,370 | $ | 198,559 | |||||||||||
(a) Includes $41.7 million paid to a third party for transferable tax credits during fiscal year 2025.
* The disclosure threshold was applied separately to each year. Amounts for these jurisdictions were not subject to the threshold for the period presented.
Significant components of the Company’s deferred tax assets and liabilities as of January 31, 2026 and February 1, 2025 are as follows (in thousands):
| January 31, 2026 | February 1, 2025 | ||||||||||
| Deferred tax assets: | |||||||||||
| Operating lease liability | $ | 575,345 | $ | 615,385 | |||||||
| Self-insurance reserves | 48,077 | 43,588 | |||||||||
| Compensation and benefits | 13,926 | 12,968 | |||||||||
| Financing obligations | 8,486 | 8,193 | |||||||||
| Environment clean up reserve | 7,142 | 6,574 | |||||||||
| Startup costs | 979 | 1,480 | |||||||||
| Other | 22,743 | 23,875 | |||||||||
| Total deferred tax assets | $ | 676,698 | $ | 712,063 | |||||||
| Deferred tax liabilities: | |||||||||||
| Operating lease right-of-use assets | $ | 544,061 | $ | 585,756 | |||||||
| Property and equipment | 147,139 | 134,955 | |||||||||
| Intangible assets | 32,092 | 32,506 | |||||||||
| Debt costs | 112 | 165 | |||||||||
| Other | 13,756 | 11,365 | |||||||||
| Total deferred tax liabilities | 737,160 | 764,747 | |||||||||
| Net deferred tax liabilities | $ | (60,462) | $ | (52,684) | |||||||
The ultimate realization of deferred tax assets is dependent upon the Company’s ability to generate sufficient taxable income during the periods in which the temporary differences become deductible. The Company has determined that it is more likely than not that the results of future operations and the reversals of existing taxable temporary differences will generate sufficient taxable income to realize the deferred tax assets. Therefore, no valuation allowance has been recorded. In making this determination, the Company considered historical levels of income as well as projections for future periods.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
| Fiscal Year Ended | |||||||||||
| January 31, 2026 | February 1, 2025 | ||||||||||
| Balance, beginning of period | $ | 2,591 | $ | 2,867 | |||||||
| Decreases for tax positions taken during prior years | — | (69) | |||||||||
| Additions for tax positions taken during the current year | 460 | 136 | |||||||||
| Settlements | — | (245) | |||||||||
| Lapses in statute of limitations | (82) | (98) | |||||||||
| Balance, end of period | $ | 2,969 | $ | 2,591 | |||||||
The total amount of unrecognized tax benefits, reflective of federal tax benefits at January 31, 2026 and February 1, 2025 that, if recognized, would favorably affect the effective tax rate was $3.0 million and $2.6 million, respectively.
The Company’s tax years from 2021 forward remain open and are subject to examination by the Internal Revenue Service or various state taxing jurisdictions.
The Company classifies interest expense and any penalties related to income tax uncertainties as a component of income tax expense. The Company recognized an immaterial amount of expense for each of fiscal years 2025, 2024, and 2023, respectively. As of January 31, 2026 and February 1, 2025, the Company had $0.2 million of accrued interest related to income tax uncertainties.
On July 4, 2025, new legislation, commonly known as the One Big Beautiful Bill Act (the “Act”), was signed into law. Among other provisions, the Act reestablished and made permanent 100% initial-year bonus depreciation on qualifying property, as well as the immediate deduction for domestic research and development expenses. The Company has quantified the
impact of the Act to our financial statements and has reflected the effects within the consolidated financial statements for fiscal year 2025.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | Mar 12, 2026 | Showing above |
| 2025 | Mar 14, 2025 | |
| 2024 | Mar 18, 2024 | |
| 2023 | Mar 16, 2023 | |
| 2022 | Mar 17, 2022 | |
| 2021 | Mar 19, 2021 | |
| 2020 | Mar 19, 2020 | |
| 2019 | Mar 25, 2019 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.