Barnes & Noble Education, Inc.BNED
Barnes & Noble Education, Inc. Income Taxes Disclosure
Income Taxes
The components of income (loss) before taxes are as follows:
| 52 weeks ended | 53 weeks ended | |||||||||||||
| May 2, 2026 | May 3, 2025 | |||||||||||||
| Domestic | $ | 20,030 | $ | (62,469) | ||||||||||
| International | 642 | 900 | ||||||||||||
| Total income (loss) before taxes | $ | 20,672 | $ | (61,569) | ||||||||||
Impact of U.S. Tax Reform
On July 4, 2025, the One Big Beautiful Bill Act ("OBBB Act”) was enacted into law. The OBBB Act includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The significant provisions of the OBBB Act is effective between Fiscal 2026 and Fiscal 2027. It did not have a material impact on the Fiscal 2026 effective tax rate and is not expected to have a material impact on the Fiscal 2027 effective tax rate.
The components of Income tax expense are as follows:
| 52 weeks ended | 53 weeks ended | |||||||||||||
| May 2, 2026 | May 3, 2025 | |||||||||||||
| Current: | ||||||||||||||
| Federal | $ | 3,224 | $ | 3,484 | ||||||||||
| State | 1,305 | 1,329 | ||||||||||||
| International | 406 | 272 | ||||||||||||
| Total Current | 4,935 | 5,085 | ||||||||||||
| Deferred: | ||||||||||||||
| Federal | (1,135) | (829) | ||||||||||||
| State | — | — | ||||||||||||
| International | — | — | ||||||||||||
| Total Deferred | (1,135) | (829) | ||||||||||||
Total | $ | 3,800 | $ | 4,256 | ||||||||||
Reconciliation between the effective income tax rate and the federal statutory income tax rate is as follows:
| 52 weeks ended | 53 weeks ended | |||||||||||||||||||||||||
| May 2, 2026 | May 3, 2025 | |||||||||||||||||||||||||
| % | $ Amount | % | $ Amount | |||||||||||||||||||||||
| US Federal Statutory Tax Rate | 21.0 | % | $ | 4,341 | 21.0 | % | $ | (12,930) | ||||||||||||||||||
State and Local Income Taxes, Net of Federal Income Tax Effect (1) | 5.8 | % | $ | 1,193 | (1.7) | % | $ | 1,044 | ||||||||||||||||||
| Foreign Tax Effects | ||||||||||||||||||||||||||
| India | ||||||||||||||||||||||||||
| India - Withholding Tax | 0.4 | $ | 76 | — | $ | 28 | ||||||||||||||||||||
| India - Other | 0.9 | $ | 196 | (0.1) | $ | 55 | ||||||||||||||||||||
| Tax Credits | ||||||||||||||||||||||||||
| WOTC | (1.4) | $ | (283) | 0.6 | $ | (341) | ||||||||||||||||||||
| Other | (0.1) | $ | (16) | — | $ | (16) | ||||||||||||||||||||
| Changes in Valuation Allowances | (6.8) | $ | (1,403) | (6.7) | $ | 4,138 | ||||||||||||||||||||
| Nontaxable or Nondeductible Items | ||||||||||||||||||||||||||
| Book Loss on Debt to Equity Conversion | — | $ | — | (18.9) | $ | 11,599 | ||||||||||||||||||||
| Other | 0.3 | $ | 62 | (1.0) | $ | 640 | ||||||||||||||||||||
| Changes in Unrecognized Tax Benefits | — | $ | — | — | $ | — | ||||||||||||||||||||
| Other Adjustments | ||||||||||||||||||||||||||
| Return to Provision | (1.4) | $ | (282) | 0.1 | $ | (36) | ||||||||||||||||||||
| Other | (0.4) | $ | (84) | (0.2) | $ | 75 | ||||||||||||||||||||
| Effective Tax Rate | 18.3 | % | $ | 3,800 | (6.9) | % | $ | 4,256 | ||||||||||||||||||
(1) State taxes in California, Florida, Pennsylvania and Texas make up the majority (greater than 50%) of the tax effect in this category.
The effective tax rate for the 52 weeks ended May 2, 2026 is higher than the prior year comparable period due to permanent differences related to the debt-to-equity conversion in the prior year period.
One percentage point on our Fiscal 2026 effective tax rate is approximately $207.
Income Taxes Paid, Net of Refunds Received
| 52 weeks ended | 53 weeks ended | ||||||||||
| May 02, 2026 | May 03, 2025 | ||||||||||
| Jurisdiction | |||||||||||
| U.S. Federal | $ | 5,870 | $ | 988 | |||||||
| State and Local | 1,772 | 913 | |||||||||
| Foreign | 275 | 229 | |||||||||
| Total income taxes paid, net of refunds received | $ | 7,917 | $ | 2,130 | |||||||
The significant components of our deferred taxes consisted of the following:
| As of | ||||||||||||||
| May 2, 2026 | May 3, 2025 | |||||||||||||
| Deferred tax assets: | ||||||||||||||
| Estimated accrued liabilities | $ | 4,258 | $ | 7,061 | ||||||||||
| Inventory | 17,194 | 18,964 | ||||||||||||
| Stock-based compensation | 2,592 | 1,809 | ||||||||||||
| Operating lease liabilities | 34,832 | 43,582 | ||||||||||||
| Tax credits | 1,241 | 1,072 | ||||||||||||
| Goodwill | 5,365 | 6,395 | ||||||||||||
| Divestitures & Capital Losses | 2,649 | 2,796 | ||||||||||||
| Net operating losses | 60,273 | 65,404 | ||||||||||||
| Interest carryforwards | 10,901 | 14,889 | ||||||||||||
| Property and equipment | 993 | 2,514 | ||||||||||||
| Other | 1,074 | 1,398 | ||||||||||||
| Gross deferred tax assets | 141,372 | 165,884 | ||||||||||||
| Valuation allowance | (83,121) | (84,566) | ||||||||||||
| Net deferred tax assets | 58,251 | 81,318 | ||||||||||||
| Deferred tax liabilities: | ||||||||||||||
| Intangible asset amortization | (11,557) | (16,304) | ||||||||||||
| Operating lease right-of-use assets | (36,819) | (46,955) | ||||||||||||
| Deferred financing costs | (1,524) | (2,250) | ||||||||||||
| LIFO inventory valuation | (8,351) | (16,944) | ||||||||||||
| Gross deferred tax liabilities | (58,251) | (82,453) | ||||||||||||
| Net deferred tax liability | $ | — | $ | (1,135) | ||||||||||
As of May 2, 2026 and May 3, 2025, BNED had $0 of unrecognized tax benefits.
Our policy is to recognize interest and penalties related to income tax matters in income tax expense. As of both May 2, 2026 and May 3, 2025, BNED had accrued $0 for net interest and penalties.
In assessing the realizability of the deferred tax assets, management considered whether it is more likely than not that some or all of the deferred tax assets would be realized. In evaluating our ability to utilize our deferred tax assets, BNED considered all available evidence, both positive and negative, in determining future taxable income on a jurisdiction-by-jurisdiction basis. As of May 2, 2026, BNED recorded a valuation allowance of $83,121 compared to $84,566 as of May 3, 2025, a net increase of $1,445 due to fluctuations in U.S. deferred tax assets and liabilities.
As of May 2, 2026, BNED had state NOL carryforwards of approximately $389,568, which will begin to expire in 2027, state tax credit carryforwards totaling $210 which will begin to expire in 2027, federal tax credit carryforward of $1,075 which will begin to expire in 2040 and federal NOLs of approximately $195,845, which have an indefinite carryforward period.
As of May 2, 2026, BNED recorded $305 of foreign withholding tax related to future repatriations of earnings from certain foreign subsidiaries.
BNED is subject to U.S. federal income tax, as well as income tax in jurisdictions of each state having an income tax. The tax years that remain subject to examination are primarily Fiscal 2019 and forward. Some earlier years remain open for a small minority of states.
Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), if a corporation undergoes an “ownership change” (generally defined as a cumulative change in our ownership by “5-percent shareholders” that exceeds 50 percentage points over a rolling three-year period), the corporation’s ability to use its pre-change net operating losses and certain other pre-change tax attributes to offset its post-change income and taxes may be limited. Similar rules may apply under state tax laws. As a result of the Rights Offering, Backstop Commitment, Private Investment, and Term Loan Debt Conversion completed on June 10, 2024, BNED may have experienced an ownership change as defined by Sections 382 and 383. The Company conducted a study to determine if an ownership change occurred. It was determined that an ownership change occurred under Section 382 and 383, and the corresponding annual limitations materially impact the utilization of our tax attributes including our $195,845 NOL carryforwards, $44,297 disallowed interest expense carryforwards, and $1,075 tax credit carryforwards as of May 2, 2026. The Company anticipates that $29,691 of these tax attributes will be made available during Fiscal 2027. The Company does not have any material uncertain tax positions requiring recognition in the financial statements as of May 2, 2026 and May 3, 2025, respectively.
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | Jul 9, 2026 | Showing above |
| 2025 | Dec 23, 2025 | |
| 2024 | Jul 1, 2024 | |
| 2023 | Jul 31, 2023 | |
| 2022 | Jun 29, 2022 | |
| 2021 | Jun 30, 2021 | |
| 2020 | Jul 14, 2020 | |
| 2019 | Jun 25, 2019 | |
| 2018 | Jun 20, 2018 | |
| 2017 | Jul 12, 2017 | |
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.