Walt Disney CoDIS
Walt Disney Co Income Taxes Disclosure
Income Taxes
Income Before Income Taxes by Domestic and Foreign Subsidiaries
Income Before Income Taxes | 2025 | 2024 | 2023 | ||||||||||||||
| Domestic subsidiaries (including U.S. exports) | $ | 9,535 | $ | 5,754 | $ | 3,086 | |||||||||||
Foreign subsidiaries | 2,468 | 1,815 | 1,683 | ||||||||||||||
| $ | 12,003 | $ | 7,569 | $ | 4,769 | ||||||||||||
Provision for Income Taxes: Current and Deferred
| Income Tax Expense (Benefit) | |||||||||||||||||
| Current | 2025 | 2024 | 2023 | ||||||||||||||
| Federal | $ | (130) | $ | 1,393 | $ | 1,475 | |||||||||||
| State | 413 | 237 | 402 | ||||||||||||||
Foreign, including foreign withholding taxes | 906 | 973 | 867 | ||||||||||||||
| 1,189 | 2,603 | 2,744 | |||||||||||||||
| Deferred | |||||||||||||||||
| Federal | (2,171) | (764) | (1,180) | ||||||||||||||
| State | (527) | 54 | 4 | ||||||||||||||
| Foreign | 81 | (97) | (189) | ||||||||||||||
| (2,617) | (807) | (1,365) | |||||||||||||||
Income tax expense (benefit) | $ | (1,428) | $ | 1,796 | $ | 1,379 | |||||||||||
Deferred Tax Assets and Liabilities
| Components of Deferred Tax (Assets) and Liabilities | September 27, 2025 | September 28, 2024 | |||||||||
| Deferred tax assets | |||||||||||
Net operating losses and tax credit carryforwards(1) | $ | (3,629) | $ | (3,444) | |||||||
| Accrued liabilities | (1,011) | (1,199) | |||||||||
Licensing revenues | (807) | (130) | |||||||||
| Lease liabilities | (786) | (862) | |||||||||
| Other | (413) | (655) | |||||||||
| Total deferred tax assets | (6,646) | (6,290) | |||||||||
| Deferred tax liabilities | |||||||||||
| Depreciable, amortizable and other property | 3,998 | 6,584 | |||||||||
Investment in U.S. entities | 916 | 1,102 | |||||||||
| Investment in foreign entities | 879 | 465 | |||||||||
Right-of-use lease assets | 628 | 692 | |||||||||
| Other | 89 | 78 | |||||||||
| Total deferred tax liabilities | 6,510 | 8,921 | |||||||||
Net deferred tax (asset) liability before valuation allowance(2) | (136) | 2,631 | |||||||||
| Valuation allowance | 2,931 | 2,991 | |||||||||
| Net deferred tax liability | $ | 2,795 | $ | 5,622 | |||||||
(1)Further details on our net operating losses and tax credit carryforwards are as follows:
| September 27, 2025 | |||||
International Theme Park net operating losses | $ | (1,515) | |||
| U.S. foreign tax credits | (945) | ||||
| State net operating losses and tax credit carryforwards | (701) | ||||
| Other | (468) | ||||
Total net operating losses and tax credit carryforwards(a) | $ | (3,629) | |||
(a) Approximately $2.3 billion of these carryforwards do not expire and are primarily related to loss carryforwards at Disneyland Paris. Approximately $1.2 billion expire between fiscal 2026 and fiscal 2035 and are primarily related to U.S. foreign tax credits.
(2)In fiscal 2025, the Company completed the acquisition of NBCU’s interest in Hulu. At the close of the transaction, Hulu’s U.S. income tax classification changed, and the Company recognized a non-cash tax benefit of approximately $3.3 billion.
Valuation Allowance
The following table details the change in valuation allowance for fiscal 2025, 2024 and 2023 (in billions):
| Balance at Beginning of Period | Increases (Decreases) to Tax Expense | Other Changes | Balance at End of Period | ||||||||||||||||||||
Year ended September 27, 2025 | $ | 3.0 | $ | (0.1) | $ | — | $ | 2.9 | |||||||||||||||
Year ended September 28, 2024 | 3.2 | (0.3) | 0.1 | 3.0 | |||||||||||||||||||
Year ended September 30, 2023 | 2.9 | 0.2 | 0.1 | 3.2 | |||||||||||||||||||
Reconciliation of the effective income tax rate for continuing operations to the federal rate
| 2025 | 2024 | 2023 | |||||||||||||||
| Federal income tax rate | 21.0 | % | 21.0 | % | 21.0 | % | |||||||||||
State taxes, net of federal benefit(1) | 2.4 | 2.2 | 5.8 | ||||||||||||||
Change in Hulu income tax classification | (27.3) | — | — | ||||||||||||||
Non-tax deductible impairments | 0.9 | 8.8 | 3.5 | ||||||||||||||
| Foreign derived intangible income | (2.2) | (3.6) | (4.3) | ||||||||||||||
Income tax audits and reserves | (8.4) | (2.4) | 1.3 | ||||||||||||||
Tax rate differential on foreign income | 3.4 | (1.6) | 0.1 | ||||||||||||||
U.S. research and development credits | (0.9) | (1.1) | (1.1) | ||||||||||||||
Tax impact of equity awards | (0.3) | 0.8 | 2.1 | ||||||||||||||
| Valuation allowance | (1.3) | (0.6) | (1.8) | ||||||||||||||
| Other | 0.8 | 0.2 | 2.3 | ||||||||||||||
| (11.9 | %) | 23.7 | % | 28.9 | % | ||||||||||||
(1)Fiscal 2023 includes an adjustment related to certain deferred state taxes
Unrecognized tax benefits
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits, excluding the related accrual for interest and penalties, is as follows:
| 2025 | 2024 | 2023 | |||||||||||||||
| Balance at the beginning of the year | $ | 1,952 | $ | 2,517 | $ | 2,449 | |||||||||||
| Increases for current year tax positions | 105 | 82 | 98 | ||||||||||||||
| Increases for prior year tax positions | 116 | 209 | 273 | ||||||||||||||
| Decreases in prior year tax positions | (164) | (423) | (144) | ||||||||||||||
| Settlements with taxing authorities | (256) | (239) | (153) | ||||||||||||||
Lapse in statute of limitations | (620) | (194) | (6) | ||||||||||||||
| Balance at the end of the year | $ | 1,133 | $ | 1,952 | $ | 2,517 | |||||||||||
Balances at September 27, 2025, September 28, 2024 and September 30, 2023 include $0.8 billion, $1.4 billion and $1.8 billion, respectively, that if recognized, would reduce our income tax expense and effective tax rate. These amounts are net of the offsetting benefits from other tax jurisdictions.
At September 27, 2025, September 28, 2024 and September 30, 2023 accrued interest and penalties related to unrecognized tax benefits were $0.3 billion, $0.9 billion and $1.0 billion, respectively. During fiscal 2025, 2024 and 2023, the Company recorded additional interest and penalties of $177 million, $157 million and $210 million, respectively, and recorded reductions in accrued interest and penalties of $816 million, $151 million and $241 million, respectively. The Company’s policy is to report interest and penalties as a component of income tax expense.
The Company is generally no longer subject to U.S. federal examination for years prior to 2018. The Company is no longer subject to examination in any of its major state or foreign tax jurisdictions for years prior to 2009.
In the next twelve months, it is reasonably possible that our unrecognized tax benefits could change due to the resolution of open tax matters, which would reduce our unrecognized tax benefits by $0.4 billion.
Other
In fiscal 2025, the Company recognized income tax benefits of $35 million for the excess of equity-based compensation deductions over amounts recorded based on the grant date fair value. In fiscal 2024 and 2023, the Company recognized income tax expense of $55 million and $93 million, respectively, for the shortfall between equity-based compensation deductions and amounts recorded based on the grant date fair value.
U.S. Legislation
In July 2025, legislation known as “One Big Beautiful Bill Act” was signed into law. The most significant tax impact on the Company will be cash timing benefits from acceleration of tax deductions on U.S. investments in fixed assets and content production, which will result in lower tax payments in the year of investment than would have otherwise occurred under the previous legislation. The cash tax benefit will begin to be realized in fiscal 2026 as U.S. federal and California state income tax
payments otherwise due in fiscal 2025 have been deferred pursuant to relief related to the 2025 wildfires in California. We do not expect a material impact on the Company’s income tax expense.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Nov 13, 2025 | Showing above |
| 2024 | Nov 14, 2024 | |
| 2023 | Nov 21, 2023 | |
| 2022 | Nov 29, 2022 | |
| 2021 | Nov 24, 2021 | |
| 2020 | Nov 25, 2020 | |
| 2019 | Nov 20, 2019 | |
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.