DOLLAR GENERAL CORP Income Taxes Disclosure

3.Income taxes

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The provision (benefit) for income taxes consists of the following:

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A reconciliation between actual income taxes and amounts computed by applying the federal statutory rate to income before income taxes is summarized as follows:

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The effective income tax rate for 2025 was 23.0% compared to a rate of 21.8% for 2024 which represents a net increase of 1.2 percentage points. The effective income tax rate was higher in 2025 primarily due to a higher state effective tax rate, enactment of Pillar Two minimum tax, and a decreased benefit from jobs-based tax credits due to higher earnings before taxes diluting the rate impact of the credits.

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The Company receives a significant income tax benefit from wages paid to certain newly hired employees who qualify for federal jobs credits, principally the Work Opportunity Tax Credit (“WOTC”). The WOTC program previously authorized under the Consolidated Appropriations Act of 2021 expired for employees hired after December 31, 2025. For 2025, the expiration of the WOTC program had an immaterial impact on our effective tax rate. Absent reauthorization, the Company will experience a significant negative impact to the effective tax rate in future years.

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The effective income tax rate for 2024 was 21.8% compared to a rate of 21.6% for 2023 which represents a net increase of 0.2 percentage points. The effective income tax rate was higher in 2024 primarily due to a higher state effective tax rate and a decreased benefit from stock-based compensation partially offset by the effect of certain rate-impacting items on lower earnings before taxes.

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Deferred taxes reflect the effects of temporary differences between 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 are as follows:

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The Company has state tax credit carryforwards of approximately $17.7 million (net of federal benefit) that will expire beginning in 2029 through 2038. The Company has approximately $48,000 of state apportioned net operating loss carryforwards, which will begin to expire in 2032 and will continue through 2036 and approximately $111.2 million of foreign net operating loss carryforwards, which will begin to expire in 2032 through 2035.

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The Company has a valuation allowance for certain state tax credit carryforwards and foreign net operating loss carryforwards and deferred tax assets, in the amount of $36.5 million and $23.0 million (net of federal benefit) which increased income tax expense by $9.6 million and $6.0 million in 2025 and 2024, respectively. Management believes that the results from operations will not generate sufficient taxable income to realize the state deferred tax assets before they expire and, with respect to the foreign deferred tax assets, will assess the existing positive and negative evidence in evaluating a potential release of the valuation allowance on the deferred tax assets in future periods.

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Management believes that it is more likely than not that the Company’s results of operations and its existing deferred tax liabilities will generate sufficient taxable income to realize the remaining deferred tax assets.

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The Company’s 2021 and earlier tax years are not open for further examination by the Internal Revenue Service (“IRS”). The IRS, at its discretion, may choose to examine the Company’s 2022 through 2024 fiscal year income tax filings. The Company has various state income tax examinations that are currently in progress. Generally, with few exceptions, the Company’s 2022 and later tax years remain open for examination by the various state taxing authorities.

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As of January 30, 2026, accruals for uncertain tax benefits, interest expense related to income taxes and potential income tax penalties were $10.8 million, $1.9 million and $0.8 million, respectively, for a total of $13.5 million. As of January 31, 2025, accruals for uncertain tax benefits, interest expense related to income taxes and potential income tax penalties were $11.6 million, $1.7 million and $0.8 million, respectively, for a total of $14.1 million. These totals are reflected in noncurrent Other liabilities in the consolidated balance sheets.

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The Company’s reserve for uncertain tax positions is expected to be reduced by $3.0 million in the coming twelve months as a result of expiring statutes of limitations or settlements. As of January 30, 2026 and January 31, 2025, approximately $10.8 million and $11.6 million, respectively, of the uncertain tax positions would impact the Company’s effective income tax rate if the Company were to recognize the tax benefit for these positions.

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The amounts associated with uncertain tax positions included in income tax expense consists of the following:

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A reconciliation of the uncertain income tax positions from February 3, 2023 through January 30, 2026 is as follows:

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The Organization of Economic Cooperation and Development has proposed a global minimum tax of 15% on a country-by-country basis (“Pillar Two”). Pursuant to Pillar Two, countries have enacted minimum tax rates of 15% effective for the 2024 tax year while other countries have enacted or proposed legislation making the 15% minimum tax rate effective for the 2025 tax year or later. The Company operates in a country that recently enacted the 15% minimum tax rate beginning in 2025. The minimum tax did not have a material impact on tax expense on an annual basis.

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We are currently assessing the One Big Beautiful Bill Act (“OBBBA”) which was enacted on July 4, 2025. The OBBBA provides full bonus depreciation for certain assets placed into service after January 19, 2025 and an election to expense U.S. incurred research or experimental expenditures. While we are still evaluating the full extent of OBBBA’s impact, in 2025 our U.S. cash taxes decreased with no material impact to our effective tax rate.