BROADRIDGE FINANCIAL SOLUTIONS, INC.BR
BROADRIDGE FINANCIAL SOLUTIONS, INC. Income Taxes Disclosure
INCOME TAXES
Earnings before income taxes shown below are based on the geographic location to which such earnings are attributable.
| Years Ended June 30, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (in millions) | ||||||||||||||||||||
| Earnings before income taxes: | ||||||||||||||||||||
| U.S. | $ | 903.6 | $ | 716.1 | $ | 710.6 | ||||||||||||||
| Foreign | 155.1 | 161.3 | 84.2 | |||||||||||||||||
| Total | $ | 1,058.7 | $ | 877.4 | $ | 794.9 | ||||||||||||||
The Provision for income taxes consists of the following components:
| Years Ended June 30, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (in millions) | ||||||||||||||||||||
| Current: | ||||||||||||||||||||
| U.S. Federal | $ | 148.8 | $ | 205.8 | $ | 143.2 | ||||||||||||||
| Foreign | 45.3 | 63.9 | 45.4 | |||||||||||||||||
| U.S. State | 30.3 | 29.4 | 26.5 | |||||||||||||||||
| Total current | 224.4 | 299.0 | 215.1 | |||||||||||||||||
| Deferred: | ||||||||||||||||||||
| U.S. Federal | 10.3 | (89.4) | (23.7) | |||||||||||||||||
| Foreign | (15.1) | (25.6) | (29.3) | |||||||||||||||||
| U.S. State | (0.4) | (4.7) | 2.2 | |||||||||||||||||
| Total deferred | (5.2) | (119.7) | (50.8) | |||||||||||||||||
| Total Provision for income taxes | $ | 219.2 | $ | 179.3 | $ | 164.3 | ||||||||||||||
| Years Ended June 30, | ||||||||||||||||||||||||||||||||||||||
| 2025 | % | 2024 | % | 2023 | % | |||||||||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||||||||||||
| Provision for income taxes at U.S. statutory rate | $ | 222.3 | 21.0 | $ | 184.2 | 21.0 | $ | 166.9 | 21.0 | |||||||||||||||||||||||||||||
| Increase (decrease) in Provision for income taxes from: | ||||||||||||||||||||||||||||||||||||||
| State taxes, net of federal tax | 24.9 | 2.4 | 20.5 | 2.3 | 23.7 | 3.0 | ||||||||||||||||||||||||||||||||
| Foreign rate differential | 2.3 | 0.2 | 5.8 | 0.7 | 2.7 | 0.3 | ||||||||||||||||||||||||||||||||
| Valuation allowances | 0.3 | — | 0.5 | 0.1 | (0.3) | — | ||||||||||||||||||||||||||||||||
| Stock-based compensation - excess tax benefits (“ETB”) | (20.5) | (1.9) | (12.9) | (1.5) | (10.4) | (1.3) | ||||||||||||||||||||||||||||||||
| Tax Credits and Foreign-Derived Intangible Income Deduction (“FDII”) | (10.4) | (1.0) | (21.2) | (2.4) | (20.2) | (2.5) | ||||||||||||||||||||||||||||||||
| Other | 0.4 | — | 2.2 | 0.3 | 1.9 | 0.2 | ||||||||||||||||||||||||||||||||
| Total Provision for income taxes | $ | 219.2 | 20.7 | $ | 179.3 | 20.4 | $ | 164.3 | 20.7 | |||||||||||||||||||||||||||||
The Provision for income taxes and effective tax rates for the fiscal year ended June 30, 2025 were $219.2 million and 20.7%, compared to $179.3 million and 20.4%, for the fiscal year ended June 30, 2024, respectively. The increase in the effective tax rate for the fiscal year ended June 30, 2025 compared to the fiscal year ended June 30, 2024 was primarily driven by an increase in pre-tax income and lower tax benefits from statutory tax incentives, which was partially offset by an increase in discrete tax benefits. The increase in discrete tax benefits was primarily attributable to an increase in the ETB.
The Provision for income taxes and effective tax rates for the fiscal year ended June 30, 2024 were $179.3 million and 20.4%, compared to $164.3 million and 20.7%, for the fiscal year ended June 30, 2023, respectively. The decrease in the effective tax rate for the fiscal year ended June 30, 2024 compared to the fiscal year ended June 30, 2023 was driven by an increase in discrete tax benefits relative to pre-tax income, primarily attributable to an ETB of $12.9 million for the fiscal year ended June 30, 2024 compared to $10.4 million for the fiscal year ended June 30, 2023.
As of June 30, 2025, the Company had approximately $826.3 million of accumulated earnings and profits attributable to foreign subsidiaries. The Company considers $726.3 million of accumulated earnings attributable to foreign subsidiaries to be permanently reinvested outside the U.S. and has not determined the cost to repatriate such earnings since it is not practicable to calculate the amount of income taxes payable in the event all such foreign earnings are repatriated. The Company does not consider the remaining $100.0 million of accumulated earnings to be permanently reinvested outside the U.S. The Company has accrued approximately $8.0 million of foreign income and withholding taxes, state income taxes, and tax on exchange gain attributable to such earnings.
In December 2021, the Organization for Economic Co-operation and Development (“OECD”) adopted model rules for a global framework to impose a 15% global minimum tax referred to as Pillar Two effective for tax years beginning after January 1, 2024. The OECD continues to issue additional guidance on the operation of the model rules. While the United States has not enacted Pillar Two, certain countries in which we operate have adopted their own version of the Pillar Two model rules. Management continues to monitor additional guidance from the OECD and countries which are implementing Pillar Two. Based on current guidance, we believe that our net income, cash flows, or financial condition will not be materially impacted by Pillar Two.
Deferred income taxes reflect the net tax effects of temporary differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when such differences are expected to reverse. Significant components of the Company’s deferred tax assets and liabilities at June 30, 2025 and 2024 were as follows:
| June 30, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (in millions) | ||||||||||||||
| Classification: | ||||||||||||||
| Long-term deferred tax assets (included in Other non-current assets) | $ | 26.8 | $ | 23.8 | ||||||||||
| Long-term deferred tax liabilities | (261.0) | (277.3) | ||||||||||||
| Net deferred tax liabilities | $ | (234.2) | $ | (253.5) | ||||||||||
| Components: | ||||||||||||||
| Deferred tax assets: | ||||||||||||||
| Accrued expenses not currently deductible | $ | 14.9 | $ | 21.4 | ||||||||||
| Compensation and benefits not currently deductible | 91.5 | 86.5 | ||||||||||||
| Net operating losses | 24.6 | 23.1 | ||||||||||||
| Tax credits | 7.3 | 6.0 | ||||||||||||
| Research and development expenses | 139.0 | 162.1 | ||||||||||||
| Deferred revenue | 70.5 | 85.6 | ||||||||||||
| Cross Currency Swap and Treasury-Locks | 7.7 | — | ||||||||||||
| Other | 3.4 | 4.3 | ||||||||||||
| Total deferred tax assets | 358.8 | 388.9 | ||||||||||||
| Less: Valuation allowances | (11.2) | (10.8) | ||||||||||||
| Deferred tax assets, net | 347.6 | 378.1 | ||||||||||||
| Deferred tax liabilities: | ||||||||||||||
| Goodwill and identifiable intangibles | 174.5 | 186.4 | ||||||||||||
| Depreciation | 5.5 | 11.9 | ||||||||||||
| Deferred expenses | 376.6 | 390.6 | ||||||||||||
| Unremitted earnings | 8.0 | 10.4 | ||||||||||||
| Cross Currency Swap and Treasury-Locks | — | 13.1 | ||||||||||||
| Other | 17.3 | 19.1 | ||||||||||||
| Deferred tax liabilities | 581.9 | 631.6 | ||||||||||||
| Net deferred tax liabilities | $ | (234.2) | $ | (253.5) | ||||||||||
The Company has estimated foreign net operating loss carryforwards of approximately $48.7 million as of June 30, 2025 of which $6.9 million are subject to expiration in the June 30, 2035 through June 30, 2043 period, and of which $41.7 million has an indefinite utilization period. In addition, the Company has estimated U.S. federal net operating loss carryforwards of approximately $25.0 million of which $9.3 million are subject to expiration in the June 30, 2026 through June 30, 2037 period with the balance of $15.7 million having an indefinite utilization period.
Valuation allowances are recognized to reduce deferred tax assets when it is more likely than not that the Company will not be able to utilize the deferred tax assets of certain subsidiaries to offset future taxable earnings. The Company has recorded valuation allowances of $11.2 million and $10.8 million at June 30, 2025 and 2024, respectively. The determination as to whether a deferred tax asset will be recognized is made on a jurisdictional basis and is based on the evaluation of historical taxable income or loss, projected future taxable income, carryforward periods, scheduled reversals of deferred tax liabilities and tax planning strategies. Projected future taxable income is based on expected results and assumptions as to the jurisdiction in which the income will be earned. The assumptions used to project future taxable income require significant judgment and are consistent with the plans and estimates used to manage the underlying businesses.
In the next twelve months, the Company does not expect a material change to its net reserve balance for unrecognized tax benefits.
The following table summarizes the activity related to the Company’s gross unrecognized tax positions:
| Fiscal Year Ended June 30, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (in millions) | ||||||||||||||||||||
| Beginning balance | $ | 74.7 | $ | 68.8 | $ | 57.6 | ||||||||||||||
| Gross increases related to prior period tax positions | 23.6 | 8.0 | 13.2 | |||||||||||||||||
| Gross decreases related to prior period tax positions | (6.2) | (2.0) | (3.3) | |||||||||||||||||
| Gross increases related to current period tax positions | 7.1 | 7.5 | 6.9 | |||||||||||||||||
| Gross decreases related to settlements | (0.4) | (0.4) | (0.3) | |||||||||||||||||
| Gross decreases due to lapse of the statute of limitations | (6.0) | (7.2) | (5.4) | |||||||||||||||||
| Ending balance | $ | 92.8 | $ | 74.7 | $ | 68.8 | ||||||||||||||
As of June 30, 2025, 2024 and 2023, the net reserve for unrecognized tax positions recorded by the Company that is included in the preceding table of gross unrecognized tax positions was $82.6 million, $67.3 million, and $62.0 million, respectively, and if reversed in full, would favorably affect the effective tax rate by these amounts, respectively.
During the fiscal year ended June 30, 2025, the Company adjusted accrued interest by $3.5 million and recognized a total liability for interest on unrecognized tax positions of $7.8 million; in the fiscal year ended June 30, 2024, the Company adjusted accrued interest by $0.1 million and recognized a total liability for interest on unrecognized tax positions of $4.2 million; in the fiscal year ended June 30, 2023, the Company adjusted accrued interest by $0.3 million and recognized a total liability for interest on unrecognized tax positions of $4.1 million.
The Company is regularly subject to examination of its income tax returns by U.S. Federal, state and foreign income tax authorities. The tax years that are currently open and could be subject to income tax audits for U.S. federal and most state and local jurisdictions are fiscal years ending June 30, 2021 through June 30, 2025, and for Canadian operations that could be subject to audit in Canada, fiscal years ending June 30, 2021 through June 30, 2025. A change in the assessment of the outcomes of such matters could materially impact our Consolidated Financial Statements.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Aug 5, 2025 | Showing above |
| 2024 | Aug 6, 2024 | |
| 2023 | Aug 8, 2023 | |
| 2022 | Aug 12, 2022 | |
| 2021 | Aug 12, 2021 | |
| 2020 | Aug 11, 2020 | |
| 2019 | Aug 6, 2019 | |
| 2018 | Aug 7, 2018 | |
| 2017 | Aug 10, 2017 | |
| 2016 | Aug 9, 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.