DILLARD'S, INC. Income Taxes Disclosure
6. Income Taxes
The provision for federal and state income taxes from continuing operations is summarized as follows:
(in thousands of dollars) | | Fiscal 2025 | | Fiscal 2024 | | Fiscal 2023 | |||
Current: |
| |
| |
| | |||
Federal | $ | 123,528 | $ | 136,281 | $ | 185,082 | |||
State and local |
| 8,480 |
| 8,936 |
| 10,412 | |||
Total current income tax expense (benefit) |
| 132,008 |
| 145,217 |
| 195,494 | |||
Deferred: |
| |
| |
| | |||
Federal |
| (5,198) |
| (7,382) |
| (12,621) | |||
State and local |
| (2,110) |
| (1,610) |
| (5,103) | |||
Total deferred income tax expense (benefit) |
| (7,308) |
| (8,992) |
| (17,724) | |||
Total income tax expense (benefit) | $ | 124,700 | $ | 136,225 | $ | 177,770 | |||
A reconciliation between the Company’s income tax provision and income tax using the U.S. federal statutory income tax rate of 21% is presented below:
(in thousands of dollars) | | Fiscal 2025 | | Fiscal 2024 | | Fiscal 2023 | ||||||||||||
Income tax at the U.S. federal statutory income tax rate | $ | 145,926 | 21.0 | % | $ | 153,237 | 21.0 | % | $ | 192,490 | 21.0 | % | ||||||
State and local income taxes, net of federal effect (a) |
| 5,437 | 0.8 |
| 6,499 | 0.9 |
| 3,986 | 0.4 | |||||||||
Tax credits |
| (1,586) | (0.2) |
| (1,850) | (0.3) |
| (2,145) | (0.2) | |||||||||
Nontaxable or nondeductible items: |
| |||||||||||||||||
Dividends paid to ESOP |
| (29,854) | (4.3) | (26,630) | (3.6) | (21,990) | (2.4) | |||||||||||
Other |
| 3,573 | 0.5 |
| 4,963 | 0.7 |
| 4,480 | 0.5 | |||||||||
Changes in unrecognized tax benefits |
| 1,204 | 0.1 |
| 6 | — |
| 949 | 0.1 | |||||||||
$ | 124,700 | 17.9 | % | $ | 136,225 | 18.7 | % | $ | 177,770 | 19.4 | % | |||||||
| (a) | States that contribute to the majority (greater than 50%) of the tax effect in this category include Texas and Tennessee for fiscal 2025, Texas, Tennessee, and Arizona for fiscal 2024, and Tennessee, Texas, Arizona, Florida, and Kansas for fiscal 2023. |
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities as of January 31, 2026 and February 1, 2025 are as follows:
| January 31, | | February 1, | |||
(in thousands of dollars) | 2026 | 2025 | ||||
Prepaid expenses |
| $ | 59,192 |
| $ | 58,592 |
Joint venture basis differences |
| 7,132 |
| 7,614 | ||
Differences between book and tax basis of inventory |
| 32,469 |
| 31,215 | ||
Operating lease assets |
| 8,056 |
| 7,586 | ||
Other |
| — |
| 2 | ||
Total deferred tax liabilities |
| 106,849 |
| 105,009 | ||
Property and equipment bases and depreciation differences |
| (66,612) |
| (57,394) | ||
Accruals not currently deductible |
| (87,308) |
| (86,878) | ||
Operating lease liabilities |
| (8,091) |
| (7,731) | ||
State tax carryforwards |
| (22,371) |
| (21,405) | ||
Other |
| (1,632) |
| (1,446) | ||
Total deferred tax assets |
| (186,014) |
| (174,854) | ||
Valuation allowance |
| 2,116 |
| 1,119 | ||
Net deferred tax assets |
| (183,898) |
| (173,735) | ||
Net deferred income taxes | $ | (77,049) | $ | (68,726) | ||
Deferred tax assets and liabilities were measured using the federal statutory income tax rate of 21% and the appropriate state statutory income tax rates. State deferred tax assets and liabilities, including net operating loss carryforwards and valuation allowances, are presented net of related federal tax effects.
At January 31, 2026, the Company had a deferred tax asset of approximately $22.4 million, primarily related to state net operating loss carryforwards that could be utilized to reduce the tax liabilities of future years. Approximately $8.6 million of these carryforwards have indefinite lives, and approximately $13.8 million will expire between fiscal 2026 and 2045. Deferred tax assets were reduced by a valuation allowance of approximately $2.1 million primarily for the state net operating loss carryforwards of various members of the affiliated group in states for which the Company determined that it is “more likely than not” that the benefit of the net operating losses will not be realized.
Deferred tax assets and liabilities are presented as follows in the accompanying consolidated balance sheets:
| January 31, | | February 1, | |||
(in thousands of dollars) | 2026 | 2025 | ||||
Net deferred tax assets - deferred income taxes | $ | (77,386) | $ | (69,099) | ||
Net deferred tax liabilities - other liabilities |
| 337 |
| 373 | ||
Net deferred income taxes | $ | (77,049) | $ | (68,726) | ||
The total amount of unrecognized tax benefits as of January 31, 2026 was $7.5 million, of which $6.2 million would, if recognized, affect the Company’s effective tax rate. The total amount of unrecognized tax benefits as of February 1, 2025 was $8.0 million, of which $5.8 million would, if recognized, affect the Company’s effective tax rate. Where applicable, associated interest expense and penalties are also recorded in income tax expense. The total amounts of interest and penalties were not material.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
(in thousands of dollars) | | Fiscal 2025 | | Fiscal 2024 | | Fiscal 2023 | |||
Unrecognized tax benefits at beginning of period | $ | 8,020 | $ | 8,110 | $ | 7,030 | |||
Gross increases—tax positions in prior period |
| 75 |
| 58 |
| 868 | |||
Gross decreases—tax positions in prior period |
| (11) |
| (261) |
| (695) | |||
Gross increases—current period tax positions |
| 1,032 |
| 1,313 |
| 1,405 | |||
Settlements | (1,361) | — | — | ||||||
Lapse of statutes of limitation |
| (290) |
| (1,200) |
| (498) | |||
Unrecognized tax benefits at end of period | $ | 7,465 | $ | 8,020 | $ | 8,110 | |||
The fiscal tax years that remain subject to examination for the federal tax jurisdiction and major state tax jurisdictions are 2022 and forward. At this time, the Company does not expect the results from any income tax audit to have a material impact on the Company’s consolidated financial statements.
The amounts of income taxes paid, net of income tax refunds received, are as follows:
(in millions of dollars) | | Fiscal 2025 | | Fiscal 2024 | | Fiscal 2023 | |||
Federal | $ | 125.0 | $ | 139.1 | $ | 169.1 | |||
State and local |
| 9.3 |
| 11.4 |
| 14.7 | |||
Income taxes paid, net of income tax refunds received | $ | 134.3 | $ | 150.5 | $ | 183.8 | |||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | Mar 27, 2026 | Showing above |
| 2025 | Mar 28, 2025 | |
| 2024 | Mar 29, 2024 | |
| 2023 | Mar 27, 2023 | |
| 2022 | Mar 29, 2022 | |
| 2021 | Mar 29, 2021 | |
| 2020 | Mar 31, 2020 | |
| 2019 | Mar 29, 2019 | |
| 2018 | Mar 30, 2018 | |
| 2017 | Mar 24, 2017 | |
| 2016 | Mar 23, 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.