CLOROX CO /DE/CLX
CLOROX CO /DE/ Income Taxes Disclosure
INCOME TAXES
The provision for income taxes, by tax jurisdiction, consisted of the following for the fiscal years ended June 30:
| 2025 | 2024 | 2023 | |||||||||||||||
| Current | |||||||||||||||||
| Federal | $ | 165 | $ | 132 | $ | 153 | |||||||||||
| State | 39 | 18 | 33 | ||||||||||||||
| Foreign | 68 | 56 | 40 | ||||||||||||||
| Total current | $ | 272 | $ | 206 | $ | 226 | |||||||||||
| Deferred | |||||||||||||||||
| Federal | $ | (17) | $ | (99) | $ | (120) | |||||||||||
| State | (2) | (5) | (28) | ||||||||||||||
| Foreign | 1 | 4 | (1) | ||||||||||||||
| Total deferred | (18) | (100) | (149) | ||||||||||||||
| Total | $ | 254 | $ | 106 | $ | 77 | |||||||||||
Income taxes paid, net of refunds, were $264, $347, and $73 for the fiscal year ended June 30, 2025, 2024, and 2023, respectively. The higher tax payments in fiscal year 2024 and lower tax payments in fiscal year 2023 were primarily driven by payments of fiscal year 2023 income taxes in fiscal year 2024 that were previously deferred as a result of the relief provided by the IRS announced in January 2023 due to winter storms in California.
The components of Earnings before income taxes, by tax jurisdiction, consisted of the following for the fiscal years ended June 30:
| 2025 | 2024 | 2023 | |||||||||||||||
| United States | $ | 886 | $ | 311 | $ | 154 | |||||||||||
| Foreign | 192 | 87 | 84 | ||||||||||||||
| Total | $ | 1,078 | $ | 398 | $ | 238 | |||||||||||
A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate on operations follows for the fiscal years ended June 30:
| 2025 | 2024 | 2023 | |||||||||||||||
| Statutory federal tax rate | 21.0 | % | 21.0 | % | 21.0 | % | |||||||||||
| State taxes (net of federal tax benefits) | 2.7 | 2.5 | 1.6 | ||||||||||||||
| Foreign tax rate differential | 2.6 | 7.7 | 8.6 | ||||||||||||||
| Federal excess tax benefits | (0.3) | (0.3) | (1.8) | ||||||||||||||
| Net U.S. tax on foreign income | (0.5) | (5.2) | (2.3) | ||||||||||||||
Loss on divestiture | 2.3 | 10.5 | — | ||||||||||||||
International legal entity reorganization | (1.1) | (6.1) | — | ||||||||||||||
| VMS goodwill impairment | — | — | 8.6 | ||||||||||||||
| Federal research and development credits | (0.5) | (1.2) | (2.7) | ||||||||||||||
| Other differences | (2.6) | (2.4) | (0.6) | ||||||||||||||
| Effective tax rate | 23.6 | % | 26.5 | % | 32.4 | % | |||||||||||
The One Big Beautiful Bill Act, was enacted in the United States on July 4, 2025. This legislation includes provisions that allow accelerated tax deductions for acquisitions of qualified property and for research expenses. It also modifies the U.S. taxation of certain earnings associated with international business. The Company is in the process of evaluating the impact of this legislation on its consolidated financial statements.
The Inflation Reduction Act was signed into law on August 16, 2022. This legislation introduced a new 15% corporate minimum tax for certain large corporations, effective at the beginning of the Company’s fiscal 2024 and it enacted a 1% excise tax on the value of share repurchases, net of new share issuances, after December 31, 2022. These provisions, as well as other corporate tax changes included in the legislation, have not had a material impact on the Company's consolidated financial statements and are not expected to have a material impact on the Company’s financial statements in the foreseeable future.
Foreign withholding taxes are provided on unremitted foreign earnings that are not indefinitely reinvested at the time the earnings are generated. The Company regularly reviews and assesses whether there are any changes to its indefinite reinvestment assertion. None of the undistributed earnings of its foreign subsidiaries were indefinitely reinvested. As a result, the Company is providing foreign withholding taxes on the undistributed earnings of all foreign subsidiaries where applicable. These withholding taxes had no significant impact on the Company’s consolidated results.
The components of net deferred tax assets (liabilities) as of June 30 are shown below:
| 2025 | 2024 | ||||||||||
| Deferred tax assets | |||||||||||
| Compensation and benefit programs | $ | 105 | $ | 109 | |||||||
Loss and tax credit carryforwards | 208 | 153 | |||||||||
| Operating and finance lease liabilities | 106 | 111 | |||||||||
| Accruals and reserves | 27 | 33 | |||||||||
| Capitalized research and development | 63 | 43 | |||||||||
| Inventory costs | 18 | 29 | |||||||||
| Other | 33 | 33 | |||||||||
| Subtotal | 560 | 511 | |||||||||
| Valuation allowance | (166) | (115) | |||||||||
| Total deferred tax assets | $ | 394 | $ | 396 | |||||||
| Deferred tax liabilities | |||||||||||
Property, plant and equipment and intangible assets | $ | (115) | $ | (84) | |||||||
| Lease right-of-use assets | (95) | (100) | |||||||||
| Other | (37) | (36) | |||||||||
| Total deferred tax liabilities | (247) | (220) | |||||||||
| Net deferred tax assets (liabilities) | $ | 147 | $ | 176 | |||||||
| The net deferred tax assets and liabilities included in the consolidated balance sheet at June 30 were as follows: | |||||||||||
| 2025 | 2024 | ||||||||||
Net deferred tax assets (1) | $ | 167 | $ | 198 | |||||||
| Net deferred tax liabilities | (20) | (22) | |||||||||
| Net deferred tax assets (liabilities) | $ | 147 | $ | 176 | |||||||
(1)Net deferred tax assets are recorded in Other assets.
The Company reviews its deferred tax assets for recoverability on a quarterly basis. A valuation allowance is established when the Company believes that it is more likely than not that some portion of its deferred tax assets will not be realized. Valuation allowances have been provided to reduce deferred tax assets to amounts considered recoverable.
Changes in the valuation allowance on deferred tax assets were as follows for the fiscal years ended June 30:
| 2025 | 2024 | 2023 | |||||||||||||||
| Valuation allowance at beginning of year | $ | (115) | $ | (59) | $ | (52) | |||||||||||
Net decrease/(increase) for U.S. capital loss carryforwards | (62) | (46) | — | ||||||||||||||
| Net decrease/(increase) for other foreign deferred tax assets | 1 | (2) | (1) | ||||||||||||||
| Net decrease/(increase) for foreign and U.S. net operating loss carryforwards and tax credits | 10 | (8) | (6) | ||||||||||||||
| Valuation allowance at end of year | $ | (166) | $ | (115) | $ | (59) | |||||||||||
The Company's carryforwards for capital losses, net operating losses, and tax credits, with related valuation allowances were as follows as of June 30:
| 2025 | |||||||||||||||||||||||
| Carryforwards | Valuation Allowances | Net Carryforwards | Fiscal Year Expiring | ||||||||||||||||||||
| Capital losses in U.S. jurisdictions | 108 | (108) | — | 2030 | |||||||||||||||||||
Net operating losses | |||||||||||||||||||||||
| U.S. jurisdictions | 2 | (2) | — | 2031 - 2038 | |||||||||||||||||||
| U.S. jurisdictions (with no expiration) | 4 | (3) | 1 | N/A | |||||||||||||||||||
| Foreign jurisdictions | 16 | (12) | 4 | 2026 - 2039 | |||||||||||||||||||
| Foreign jurisdictions (with no expiration) | 7 | — | 7 | N/A | |||||||||||||||||||
| Total net operating losses | 29 | (17) | 12 | ||||||||||||||||||||
Income tax credits | |||||||||||||||||||||||
| U.S. jurisdictions | 33 | — | 33 | 2026 - 2035 | |||||||||||||||||||
| U.S. jurisdictions (with no expiration) | 2 | — | 2 | N/A | |||||||||||||||||||
| Foreign jurisdictions | 30 | (30) | — | 2026 | |||||||||||||||||||
| Foreign jurisdictions (with no expiration) | 6 | (5) | 1 | N/A | |||||||||||||||||||
| Total income tax credits | 71 | (35) | 36 | ||||||||||||||||||||
| Total carryforwards | $ | 208 | $ | (160) | $ | 48 | |||||||||||||||||
| 2024 | |||||||||||||||||
| Carryforwards | Valuation Allowances | Net Carryforwards | |||||||||||||||
| Capital losses in U.S. jurisdictions | 46 | (46) | — | ||||||||||||||
| Net operating losses | |||||||||||||||||
| U.S. jurisdictions | 6 | (5) | 1 | ||||||||||||||
| U.S. jurisdictions (with no expiration) | 9 | (8) | 1 | ||||||||||||||
| Foreign jurisdictions | 18 | (16) | 2 | ||||||||||||||
| Foreign jurisdictions (with no expiration) | 8 | — | 8 | ||||||||||||||
| Total net operating losses | 41 | (29) | 12 | ||||||||||||||
Income tax credits | |||||||||||||||||
| U.S. jurisdictions | 30 | — | 30 | ||||||||||||||
| U.S. jurisdictions (with no expiration) | 2 | — | 2 | ||||||||||||||
| Foreign jurisdictions | 30 | (30) | — | ||||||||||||||
| Foreign jurisdictions (with no expiration) | 4 | (3) | 1 | ||||||||||||||
| Total income tax credits | 66 | (33) | 33 | ||||||||||||||
| Total carryforwards | $ | 153 | $ | (108) | $ | 45 | |||||||||||
The Company files income tax returns in the U.S. federal and various state, local and foreign jurisdictions. The federal statute of limitations has expired for all tax years through June 30, 2015. Various income tax returns in state and foreign jurisdictions are currently in the process of examination.
The Company recognizes interest and penalties related to uncertain tax positions as a component of income tax expense. As of June 30, 2025 and 2024, the total balance of accrued interest and penalties related to uncertain tax positions was $4 and $3, respectively. Interest and penalties related to uncertain tax positions included in income tax expense resulted in an expense of $1 in fiscal year 2025, an expense of $1 in fiscal year 2024, and a net benefit of $0 in fiscal year 2023.
The following is a reconciliation of the beginning and ending amounts of the Company’s gross unrecognized tax benefits for the fiscal years ended June 30:
| 2025 | 2024 | 2023 | |||||||||||||||
| Unrecognized tax benefits at beginning of year | $ | 22 | $ | 17 | $ | 17 | |||||||||||
| Gross increases - tax positions in prior periods | 3 | — | 1 | ||||||||||||||
| Gross decreases - tax positions in prior periods | (1) | (4) | (3) | ||||||||||||||
| Gross increases - current period tax positions | 3 | 9 | 2 | ||||||||||||||
| Unrecognized tax benefits at end of year | $ | 27 | $ | 22 | $ | 17 | |||||||||||
Included in the balance of unrecognized tax benefits as of June 30, 2025, 2024 and 2023, were potential benefits of $20, $15 and $14, respectively, which if recognized, would affect the effective tax rate. Unrecognized tax benefits are not expected to significantly increase or decrease within the next 12 months.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Aug 8, 2025 | Showing above |
| 2024 | Aug 8, 2024 | |
| 2023 | Aug 10, 2023 | |
| 2022 | Aug 10, 2022 | |
| 2021 | Aug 10, 2021 | |
| 2020 | Aug 13, 2020 | |
| 2019 | Aug 14, 2019 | |
| 2018 | Aug 14, 2018 | |
| 2017 | Aug 15, 2017 | |
| 2016 | Aug 16, 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.