Coca-Cola Consolidated, Inc.COKE
Coca-Cola Consolidated, Inc. Income Taxes Disclosure
Income Taxes
The current income tax provision represents the estimated amount of income taxes paid or payable for the year, as well as changes in estimates from prior years. The deferred income tax provision (benefit) represents the change in deferred tax liabilities and assets. The following table presents the significant components of the provision for income taxes:
| Fiscal Year | ||||||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| Current: | ||||||||||||||||||||
| Federal | $ | 149,255 | $ | 179,019 | $ | 158,475 | ||||||||||||||
| State | 39,377 | 41,981 | 39,652 | |||||||||||||||||
| Total current provision | $ | 188,632 | $ | 221,000 | $ | 198,127 | ||||||||||||||
| Deferred: | ||||||||||||||||||||
| Federal | $ | 12,430 | $ | 958 | $ | (40,658) | ||||||||||||||
| State | 1,274 | 1,571 | (8,363) | |||||||||||||||||
| Total deferred provision (benefit) | $ | 13,704 | $ | 2,529 | $ | (49,021) | ||||||||||||||
| Income tax expense | $ | 202,336 | $ | 223,529 | $ | 149,106 | ||||||||||||||
The Company’s effective income tax rate was 26.2% for 2025, 26.1% for 2024 and 26.7% for 2023. The following table provides a reconciliation of income tax expense at the statutory federal rate to actual income tax expense:
| Fiscal Year | ||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||
| (in thousands) | Income tax expense | % pre-tax income | Income tax expense | % pre-tax income | Income tax expense | % pre-tax income | ||||||||||||||||||||||||||||||||
| U.S. federal statutory expense | $ | 162,312 | 21.0 | % | $ | 179,898 | 21.0 | % | $ | 117,071 | 21.0 | % | ||||||||||||||||||||||||||
State income taxes, net of federal benefit(1) | 30,188 | 4.0 | 32,638 | 3.8 | 21,494 | 3.9 | ||||||||||||||||||||||||||||||||
| Nontaxable/nondeductible items | 10,047 | 1.3 | 10,494 | 1.2 | 11,290 | 2.0 | ||||||||||||||||||||||||||||||||
| Changes in valuation allowance | 168 | — | 1,414 | 0.2 | 701 | 0.1 | ||||||||||||||||||||||||||||||||
| Adjustment for uncertain tax positions | 70 | — | 55 | — | 52 | — | ||||||||||||||||||||||||||||||||
| Other, net | 126 | — | 215 | — | (257) | (0.1) | ||||||||||||||||||||||||||||||||
| Tax credits | (575) | (0.1) | (1,185) | (0.1) | (1,245) | (0.2) | ||||||||||||||||||||||||||||||||
| Income tax expense | $ | 202,336 | 26.2 | % | $ | 223,529 | 26.1 | % | $ | 149,106 | 26.7 | % | ||||||||||||||||||||||||||
(1)The states that contribute to the majority (greater than 50%) of the tax effect in this category include Indiana, Maryland, Virginia and Tennessee for fiscal years 2025, 2024 and 2023.
Total cash income taxes paid in 2025 was $196.6 million, of which $155.0 million related to federal tax and $41.6 million related to state and local tax jurisdictions. Total cash income taxes paid in 2024 was $224.0 million, of which $180.0 million related to federal tax and $44.0 related to state and local tax jurisdictions. Total cash income taxes paid in 2023 was $200.8 million, of which $162.0 million related to federal tax and $38.8 million related to state and local tax jurisdictions. For 2025, 2024 and 2023, no cash taxes paid to any individual state or local jurisdiction met or exceeded 5% of total cash income taxes paid.
The Company records liabilities for uncertain tax positions related to income tax positions. These liabilities reflect the Company’s best estimate of the ultimate income tax liability based on known facts and information. Material changes in facts or information, as well as
the expiration of statutes of limitations and/or settlements with individual tax jurisdictions, may result in material adjustments to these estimates in the future.
The Company recognizes potential interest and penalties related to uncertain tax positions in income tax expense. During 2025, 2024 and 2023, the interest and penalties related to uncertain tax positions recognized in income tax expense were not material. In addition, the amount of interest and penalties accrued at December 31, 2025 and December 31, 2024 were not material.
The Company had uncertain tax positions, including accrued interest, of $0.5 million on December 31, 2025 and $0.4 million on December 31, 2024, all of which would affect the Company’s effective income tax rate if recognized.
A reconciliation of uncertain tax positions, excluding accrued interest, is as follows:
| Fiscal Year | ||||||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| Beginning balance - gross uncertain tax positions | $ | 374 | $ | 330 | $ | 285 | ||||||||||||||
| Increase as a result of tax positions taken in the current year | 120 | 105 | 105 | |||||||||||||||||
| Reduction as a result of the expiration of the applicable statute of limitations | (61) | (61) | (60) | |||||||||||||||||
| Ending balance - gross uncertain tax positions | $ | 433 | $ | 374 | $ | 330 | ||||||||||||||
Deferred income taxes are recorded based upon temporary differences between the financial statement and tax bases of assets and liabilities and available net operating loss and tax credit carryforwards. Temporary differences and carryforwards that comprised deferred income tax assets and liabilities were as follows:
| (in thousands) | December 31, 2025 | December 31, 2024 | ||||||||||||
| Acquisition related contingent consideration | $ | 176,850 | $ | 160,120 | ||||||||||
| Deferred compensation | 39,364 | 34,308 | ||||||||||||
| Accrued liabilities | 35,285 | 35,912 | ||||||||||||
| Operating lease liabilities | 29,435 | 28,299 | ||||||||||||
| Deferred revenue | 25,195 | 25,474 | ||||||||||||
| Postretirement benefits | 16,114 | 13,179 | ||||||||||||
| Transactional costs | 2,253 | 2,670 | ||||||||||||
| Net operating loss carryforwards | 564 | 754 | ||||||||||||
| Financing lease agreements | — | 287 | ||||||||||||
| Other | — | 956 | ||||||||||||
| Deferred income tax assets | $ | 325,060 | $ | 301,959 | ||||||||||
| Less: Valuation allowance for deferred tax assets | 5,715 | 5,535 | ||||||||||||
| Net deferred income tax asset | $ | 319,345 | $ | 296,424 | ||||||||||
| Depreciation | $ | (245,739) | $ | (212,926) | ||||||||||
| Intangible assets | (165,413) | (167,428) | ||||||||||||
| Right-of-use assets - operating leases | (28,726) | (27,499) | ||||||||||||
| Prepaid expenses | (10,399) | (9,784) | ||||||||||||
| Inventory | (7,169) | (8,547) | ||||||||||||
| Patronage dividend | (2,728) | (3,181) | ||||||||||||
| Other | (2,909) | — | ||||||||||||
| Deferred income tax liabilities | $ | (463,083) | $ | (429,365) | ||||||||||
| Net deferred income tax liability | $ | (143,738) | $ | (132,941) | ||||||||||
The Company’s deferred income tax assets and liabilities are subject to adjustment in future periods based on the Company’s ongoing evaluations of such deferred assets and liabilities and new information available to the Company.
Valuation allowances are recognized on deferred tax assets if the Company believes it is more likely than not that some or all of the deferred tax assets will not be realized. The Company believes the majority of the deferred tax assets will be realized due to the reversal of certain significant temporary differences and anticipated future taxable income from operations.
The valuation allowance of $5.7 million on December 31, 2025 and $5.5 million on December 31, 2024 was established primarily for certain loss carryforwards and deferred compensation.
As of December 31, 2025, the Company had no federal net operating losses and $11.3 million of state net operating losses available to reduce future income taxes, which expire in varying amounts through 2045.
Prior tax years beginning in year 2022 remain open to examination by the Internal Revenue Service, and various tax years beginning in year 2002 remain open to examination by certain state tax jurisdictions due to loss carryforwards.
On July 4, 2025, H.R. 1, commonly known as the “One Big Beautiful Bill Act” (the “OBBBA”), was enacted into law. The OBBBA is a reconciliation bill impacting businesses as it includes a broad range of tax reform provisions. The Company does not expect any material net impact to its consolidated financial statements as a result of the OBBBA.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 18, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
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.