Bloomin' Brands, Inc.BLMN
Bloomin' Brands, Inc. Income Taxes Disclosure
Income Taxes
The following table presents the domestic and foreign components of (Loss) income before (benefit) provision for income taxes for the periods indicated:
| FISCAL YEAR | |||||||||||||||||
| (dollars in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Domestic | $ | (14,784) | $ | (53,921) | $ | 235,357 | |||||||||||
| Foreign | 6,593 | (4,886) | (4,170) | ||||||||||||||
| (Loss) income before (benefit) provision for income taxes | $ | (8,191) | $ | (58,807) | $ | 231,187 | |||||||||||
(Benefit) provision for income taxes consisted of the following for the periods indicated:
| FISCAL YEAR | |||||||||||||||||
| (dollars in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Current provision (benefit): | |||||||||||||||||
| Federal | $ | 1,188 | $ | 12,192 | $ | 16,260 | |||||||||||
| State | 3,452 | 6,011 | 10,593 | ||||||||||||||
| Foreign | 6,824 | — | (40) | ||||||||||||||
| 11,464 | 18,203 | 26,813 | |||||||||||||||
| Deferred (benefit) provision: | |||||||||||||||||
| Federal | (37,640) | (31,185) | (6,506) | ||||||||||||||
| State | (1,686) | (348) | 726 | ||||||||||||||
| Foreign | 1,163 | 1,196 | (2,631) | ||||||||||||||
| (38,163) | (30,337) | (8,411) | |||||||||||||||
| (Benefit) provision for income taxes | $ | (26,699) | $ | (12,134) | $ | 18,402 | |||||||||||
Effective Income Tax Rate - The reconciliation of income taxes calculated at the United States federal tax statutory rate to the Company’s effective income tax rate is as follows for the period indicated pursuant to the disclosure requirements of ASU No. 2023-09 for the year ended December 28, 2025. See Note 1 - Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements for additional details about the adoption of ASU No. 2023-09. Due to the Loss before benefit for income taxes for 2025, a positive percentage change for such year in the effective tax rate table reflects a favorable income tax benefit, whereas a negative percentage change in the effective tax rate table reflects an unfavorable income tax expense:
| FISCAL YEAR | |||||||||||
| 2025 | |||||||||||
| (dollars in thousands) | Amount | % | |||||||||
| Income tax benefit at federal statutory rate | $ | (1,720) | 21.0 | % | |||||||
| State and local income taxes net of federal tax benefit (1) | 1,796 | (21.9) | |||||||||
| Foreign tax effects: | |||||||||||
| Brazil | |||||||||||
| Withholding taxes - royalties | 2,488 | (30.4) | |||||||||
| Withholding taxes - interest on final installment from Brazil sale transaction | 2,260 | (27.6) | |||||||||
| Korea | |||||||||||
| Withholding taxes - royalties | 1,660 | (20.3) | |||||||||
| Netherlands | |||||||||||
| Income tax impact of outside basis difference on equity method investment | (861) | 10.5 | |||||||||
| Foreign currency gains related to deferred installment | 2,024 | (24.7) | |||||||||
| Valuation allowance on deferred tax assets | 958 | (11.7) | |||||||||
| Foreign tax credits | (2,260) | 27.6 | |||||||||
| Other | 230 | (2.8) | |||||||||
| Various Foreign other | 241 | (2.9) | |||||||||
| Effect of changes in tax laws or rates enacted | 655 | (8.0) | |||||||||
| Effect of cross-border tax laws | (881) | 10.8 | |||||||||
| Tax Credits: | |||||||||||
| Employer related tax credits | (44,796) | 546.9 | |||||||||
| Foreign tax credits | (4,552) | 55.6 | |||||||||
| Other credits | (26) | 0.3 | |||||||||
| Non-taxable or non-deductible items: | |||||||||||
| FICA on certain tips | 9,507 | (116.1) | |||||||||
| Net officers' life insurance | (828) | 10.1 | |||||||||
| Non-controlling interest | (1,048) | 12.8 | |||||||||
| Goodwill impairment | 5,919 | (72.3) | |||||||||
| Stock-based compensation | 1,160 | (14.2) | |||||||||
| Executive compensation | 1,026 | (12.5) | |||||||||
| Meals & entertainment | 779 | (9.5) | |||||||||
| Other | 250 | (3.0) | |||||||||
| Changes in unrecognized tax benefits | (316) | 3.9 | |||||||||
| Other - net | (364) | 4.4 | |||||||||
| Income tax benefit and effective income tax rate | $ | (26,699) | 326.0 | % | |||||||
________________
(1)Florida and Texas made up the majority (greater than 50%) of the tax effect in this category.
In the U.S., a restaurant company employer may claim a credit against its federal income taxes for FICA taxes paid on certain tipped wages (the “FICA tax credit”). The level of FICA tax credits is primarily driven by U.S. Restaurant sales and is not impacted by costs incurred that may reduce (Loss) income before (benefit) provision for income taxes.
The Company has a blended federal and state statutory rate of approximately 26%. The effective income tax rate for 2025 differs from the blended federal and state statutory rate primarily due to the impact of the FICA tax credit relative to a low Loss before benefit for income taxes.
The following is a reconciliation of the United States federal income tax statutory rate to the Company’s effective income tax rate for the years ended December 29, 2024 and December 31, 2023, respectively, as previously disclosed and prior to the adoption of ASU No. 2023-09:
| FISCAL YEAR | |||||||||||
| 2024 | 2023 | ||||||||||
| Income taxes at federal statutory rate | 21.0 | % | 21.0 | % | |||||||
| State and local income taxes, net of federal benefit | (7.8) | 3.8 | |||||||||
| Non-deductible loss on 2025 Notes Partial Repurchase | (49.5) | — | |||||||||
| Net changes in deferred tax valuation allowances | (5.3) | (0.9) | |||||||||
| Foreign tax rate differential | (2.7) | 0.1 | |||||||||
| Non-deductible compensation | (2.2) | 1.0 | |||||||||
| Other non-deductible expenses | (2.2) | 0.3 | |||||||||
| Change in foreign tax law | (2.0) | (1.1) | |||||||||
| Statute expiration on foreign net operating losses | (0.3) | 1.1 | |||||||||
| Tax settlements and related adjustments | (0.1) | 0.1 | |||||||||
| Employment-related credits, net | 58.9 | (15.9) | |||||||||
| Non-taxable gains on foreign currency forward contracts | 6.9 | — | |||||||||
| Non-controlling interests | 1.9 | (0.6) | |||||||||
| Net life insurance expense | 1.4 | (0.3) | |||||||||
| U.S. tax impact on foreign income | 1.2 | (0.9) | |||||||||
| Other, net | 1.4 | 0.3 | |||||||||
| Total | 20.6 | % | 8.0 | % | |||||||
The net increase in the effective income tax rate in 2024 as compared to 2023 was primarily a result of the benefit of FICA tax credits on certain tipped wages, partially offset by the 2024 non-deductible losses associated with the 2025 Notes Partial Repurchase, relative to the 2024 Loss before benefit for income taxes.
The Company has a blended federal and state statutory rate of approximately 26%. The effective income tax rate for 2024 was lower than the blended federal and state statutory rate primarily due to the federal and state impact of nondeductible losses associated with the 2025 Notes Partial Repurchase, partially offset by the FICA tax credits on certain tipped wages, relative to the 2024 Loss before benefit for income taxes. The effective income tax rate in 2023 was lower than the blended federal and state statutory rate primarily due to the benefit of FICA tax credits on certain tipped wages.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the United States. Certain provisions of OBBBA became effective during 2025, while other provisions will become effective in periods subsequent to 2025. The Company has evaluated the provisions of OBBBA applicable to its operations and, based on its assessment as of December 28, 2025, has determined the impact on its consolidated financial statements to be immaterial. The Company will continue to monitor developments and evaluate the effects of any additional guidance or interpretive regulations issued in connection with OBBBA.
Deferred Tax Assets and Liabilities - The income tax effects of temporary differences that give rise to significant portions of deferred income tax assets and liabilities are as follows as of the periods indicated:
| (dollars in thousands) | DECEMBER 28, 2025 | DECEMBER 29, 2024 | |||||||||
| Deferred income tax assets: | |||||||||||
| Operating lease liabilities | $ | 310,313 | $ | 320,169 | |||||||
| Insurance reserves | 17,225 | 13,874 | |||||||||
| Unearned revenue | 58,443 | 57,567 | |||||||||
| Deferred compensation | 10,946 | 11,392 | |||||||||
| Net operating loss carryforwards | 7,481 | 9,002 | |||||||||
| Federal tax credit carryforwards (1) | 240,828 | 202,319 | |||||||||
| Other, net (2) | 8,982 | 6,905 | |||||||||
| Gross deferred income tax assets | 654,218 | 621,228 | |||||||||
| Less: valuation allowance | (14,185) | (13,707) | |||||||||
| Deferred income tax assets, net of valuation allowance | 640,033 | 607,521 | |||||||||
| Deferred income tax liabilities: | |||||||||||
| Less: operating lease right-of-use asset basis differences | (243,408) | (252,958) | |||||||||
| Less: property, fixtures and equipment basis differences | (70,087) | (68,814) | |||||||||
| Less: intangible asset basis differences | (101,845) | (100,227) | |||||||||
| Less: foreign outside basis difference on equity method investment (3) | (8,143) | (33,822) | |||||||||
| Less: unrealized foreign exchange gain | (866) | — | |||||||||
| Deferred income tax assets, net | $ | 215,684 | $ | 151,700 | |||||||
________________
(1)Federal tax credit carryforwards are presented net of certain liabilities for unrecognized tax benefits.
(2)As of December 28, 2025 and December 29, 2024, the Company maintained deferred tax liabilities for state income taxes on historical foreign earnings of $0.1 million and $0.3 million, respectively.
(3)The decrease in the balance as of December 28, 2025 is primarily attributable to income taxes withheld on the proceeds received from the Brazil sale transaction during 2025.
As of December 28, 2025, valuation allowances against deferred tax assets in the U.S. and in certain foreign jurisdictions totaled $1.4 million and $12.8 million, respectively. The Company will maintain the valuation allowances in each applicable tax jurisdiction until it determines it is more likely than not the deferred tax assets will be realized. The net increase in the deferred tax valuation allowance in 2025 is primarily attributable to U.S. foreign tax credits that the Company does not expect to realize.
As of December 28, 2025, the Company maintains a deferred tax liability of $8.1 million related to the financial statement carrying amount over the tax basis of the equity method investment in Brazil. The Company has not recorded a deferred tax liability on the financial statement carrying amount over the tax basis of its other investments in foreign subsidiaries because the Company continues to assert that it is indefinitely reinvested in its underlying investments in those foreign subsidiaries. The determination of any unrecorded deferred tax liability on this amount is not practicable due to the uncertainty of how these investments would be recovered.
As of December 28, 2025, the Company did not have aggregate undistributed foreign earnings from its consolidated foreign subsidiaries.
Income Tax Payments - Following is a summary of income taxes paid by jurisdiction pursuant to the disclosure requirements of ASU No. 2023-09 for the period presented:
| FISCAL YEAR | |||||
| (dollars in thousands) | 2025 | ||||
| United States - Federal | $ | 4,500 | |||
| United States - State and local | $ | 2,348 | |||
| Foreign | |||||
| Brazil (1) | $ | 32,211 | |||
| Other | 2,076 | ||||
| Total cash paid for income taxes, net of refunds | $ | 41,135 | |||
________________
(1)Includes approximately $27.5 million of withholding taxes related to both installments of the Brazil sale transaction.
Following is a summary of income taxes paid prior to ASU No. 2023-09 for the periods presented:
| FISCAL YEAR | |||||||||||
| (dollars in thousands) | 2024 | 2023 | |||||||||
| Cash paid for income taxes, net of refunds | $ | 21,084 | $ | 27,750 | |||||||
Tax Carryforwards - The amount and expiration dates of tax loss carryforwards and credit carryforwards as of December 28, 2025 are as follows:
| (dollars in thousands) | EXPIRATION DATE | AMOUNT | |||||||||||||||
| Federal tax credit carryforwards | 2026 | - | 2045 | $ | 252,535 | ||||||||||||
| Foreign loss carryforwards | 2026 | - | Indefinite | $ | 43,640 | ||||||||||||
| Foreign credit carryforwards | Indefinite | $ | 1,822 | ||||||||||||||
As of December 28, 2025, the Company had $251.7 million in general business tax credit carryforwards, which have a 20-year carryforward period and are utilized on a first-in, first-out basis. The Company currently expects to utilize these tax credit carryforwards within a 10-year period. However, the Company’s ability to utilize these tax credits could be adversely impacted by, among other items, a future “ownership change” as defined under Section 382 of the Internal Revenue Code as well as the Company’s inability to generate sufficient future taxable income.
Unrecognized Tax Benefits - As of December 28, 2025 and December 29, 2024, the liability for unrecognized tax benefits was $17.3 million and $17.5 million, respectively. Of the total amount of unrecognized tax benefits, including accrued interest and penalties, $17.0 million and $17.1 million, respectively, if recognized, would impact the Company’s effective income tax rate.
The following table summarizes the activity related to the Company’s unrecognized tax benefits for the period indicated:
| FISCAL YEAR | |||||
| (dollars in thousands) | 2025 | ||||
| Balance, beginning of the period | $ | 17,479 | |||
| Additions for tax positions taken during a prior period | 1 | ||||
| Reductions for tax positions taken during a prior period | (3) | ||||
| Additions for tax positions taken during the current period | 699 | ||||
| Lapses in the applicable statutes of limitations | (853) | ||||
| Balance, end of the period | $ | 17,323 | |||
The Company had approximately $0.7 million accrued for the payment of interest and penalties as of December 28, 2025 and December 29, 2024. The Company recognized immaterial interest and penalties related to uncertain tax positions in the (Benefit) provision for income taxes, for all periods presented.
Open Tax Years - Following is a summary of the open audit years by jurisdiction as of December 28, 2025:
| OPEN AUDIT YEARS | |||||||||||
| United States - federal | 2007 | - | 2024 | ||||||||
| United States - state | 2020 | - | 2024 | ||||||||
| Foreign | 2015 | - | 2024 | ||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Feb 22, 2023 | |
| 2021 | Feb 23, 2022 | |
| 2020 | Feb 24, 2021 | |
| 2019 | Feb 26, 2020 | |
| 2018 | Feb 27, 2019 | |
| 2017 | Feb 28, 2018 | |
| 2016 | Feb 22, 2017 | |
| 2015 | Feb 24, 2016 | |
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.