DICK'S SPORTING GOODS, INC.DKS
DICK'S SPORTING GOODS, INC. Income Taxes Disclosure
Provision for Income Taxes
The components of the provision for income taxes are as follows for the fiscal years presented (in thousands):
| 2025 | 2024 | 2023 | |||||||||||||||
Current: | |||||||||||||||||
Federal | $ | 124,523 | $ | 292,197 | $ | 212,369 | |||||||||||
State | 62,067 | 76,366 | 55,920 | ||||||||||||||
| International | 6,328 | — | — | ||||||||||||||
| Total current provision | 192,918 | 368,563 | 268,289 | ||||||||||||||
Deferred: | |||||||||||||||||
Federal | 94,068 | (13,255) | 4,301 | ||||||||||||||
State | 4,265 | (1,583) | (958) | ||||||||||||||
| International | 1,483 | — | — | ||||||||||||||
| Total deferred provision | 99,816 | (14,838) | 3,343 | ||||||||||||||
Total provision | $ | 292,734 | $ | 353,725 | $ | 271,632 | |||||||||||
In accordance with the adoption of ASU 2023-09 on a prospective basis, the following table reflects the reconciliation of the federal statutory rate to the Company’s effective income tax rate for the current fiscal year (dollar amounts in thousands):
| 2025 | |||||||||||
| Amount | Percent | ||||||||||
| $ | 239,814 | 21.00 | % | ||||||||
Domestic state and local income taxes, net of federal income tax effect (1) | 47,689 | 4.17 | % | ||||||||
| Foreign tax effects | 10,959 | 0.96 | % | ||||||||
| Effect of changes in tax laws or rates enacted in the current period | — | — | % | ||||||||
| Effect of cross-border tax laws | 3,957 | 0.35 | % | ||||||||
| Tax credits | (17,290) | (1.51) | % | ||||||||
| Changes in valuation allowances | (2,565) | (0.22) | % | ||||||||
| Nontaxable or nondeductible items: | |||||||||||
| Transaction costs | 13,674 | 1.20 | % | ||||||||
Other (2) | (7,905) | (0.70) | % | ||||||||
| Changes in unrecognized tax benefits | 4,389 | 0.38 | % | ||||||||
| Other adjustments | 12 | — | % | ||||||||
| Effective income tax rate | $ | 292,734 | 25.63 | % | |||||||
(1)State taxes in New York, California, Pennsylvania, Illinois, New Jersey and Massachusetts represent the majority (greater than 50%) of the tax effect in this category.
(2)Includes $9.1 million of excess tax benefits from stock-based compensation, net of non-deductible amounts.
In accordance with the adoption of ASU 2023-09 on a prospective basis, the following table reflects the domestic and international components of income before income taxes are as follows (in thousands):
| 2025 | |||||
| Domestic | $ | 1,145,517 | |||
| International | (3,544) | ||||
| Total income before income taxes | $ | 1,141,973 | |||
Domestic income before income taxes includes the results of non-U.S. operations in branches owned directly by the U.S., which are subject to U.S. income tax.
For fiscal years prior to the adoption of ASU 2023-09, the following table is a reconciliation of the statutory federal income tax rate to the Company’s effective tax rate for the periods presented:
| 2024 | 2023 | ||||||||||
Federal statutory rate | 21.0 | % | 21.0 | % | |||||||
State tax, net of federal benefit | 4.2 | % | 4.2 | % | |||||||
| Excess tax benefit related to stock-based compensation | (1.8) | % | (4.9) | % | |||||||
| Eliminated bond hedge deduction following Convertible Senior Notes exchanges | — | % | 0.2 | % | |||||||
Other permanent items | (0.1) | % | 0.1 | % | |||||||
Effective income tax rate | 23.3 | % | 20.6 | % | |||||||
Components of deferred tax assets (liabilities) consist of the following as of the end of the fiscal years presented (in thousands):
| 2025 | 2024 | ||||||||||
| Operating lease liabilities | $ | 1,521,547 | $ | 782,953 | |||||||
Inventory | 62,267 | 57,793 | |||||||||
| Employee benefits and withholdings | 75,456 | 49,653 | |||||||||
Stock-based compensation | 22,780 | 18,395 | |||||||||
Gift cards | 27,240 | 24,946 | |||||||||
| Other accrued expenses not currently deductible for tax purposes | 69,753 | 16,338 | |||||||||
| Net operating loss carryforward | 237,242 | — | |||||||||
| Capital loss, credits and other carryforwards | 72,882 | — | |||||||||
Other | 33,789 | 13,973 | |||||||||
Total deferred tax assets | 2,122,956 | 964,051 | |||||||||
| Valuation allowance | (315,687) | — | |||||||||
| Total deferred tax assets, net | 1,807,269 | 964,051 | |||||||||
| Operating lease assets | (1,191,771) | (605,401) | |||||||||
Property and equipment | (407,708) | (274,823) | |||||||||
Inventory valuation | (132,249) | (27,849) | |||||||||
Intangibles | (189,325) | — | |||||||||
Other | (7,635) | (3,294) | |||||||||
Total deferred tax liabilities | (1,928,688) | (911,367) | |||||||||
| Net deferred tax (liability) asset | $ | (121,419) | $ | 52,684 | |||||||
In fiscal 2025, of the $121.4 million net deferred tax liability, $82.5 million is included within other long-term assets and $203.9 million was included within long-term liabilities on the Consolidated Balance Sheet. In fiscal 2024, the $52.7 million net deferred tax asset was included in its entirety within other long-term assets.
As of January 31, 2026, the Company has established cumulative valuation allowances of $315.7 million related to the Foot Locker segment to reduce our deferred tax assets to an amount that is more likely than not to be realized. A valuation allowance of $279.7 million was recorded against tax loss carryforwards and other tax attributes of certain foreign entities. Based on the history of losses and the absence of prudent and feasible business plans for generating future taxable income in these entities, the Company believes it is more likely than not that the benefit of these loss carryforwards will not be realized. As of January 31, 2026, a valuation allowance of $26.5 million was established to offset deferred tax assets on capital losses as the Company does not have any reasonably foreseeable sources of capital gains in the U.S. or Canada. Additionally, a valuation allowance of $6.8 million was established for foreign taxes assessed at rates in excess of the U.S. federal tax rate for which no U.S. foreign tax credit is available. The Company also has a valuation allowance of $2.7 million related to losses from a legal entity restructuring.
At January 31, 2026, the Company has international operating loss carryforwards of approximately $1,137.9 million, and other tax attributes with a potential tax benefit of $257.8 million, including unrecognized tax benefits. Of this amount, $6.6 million relates to gross operating loss carryforwards of $30.8 million that will expire between 2026 and 2040. The remaining international operating loss carryforwards do not expire. Additionally, the Company has international minimum tax credit carryforwards with a potential tax benefit of $2.6 million.
The Company also has U.S. capital loss carryforwards of $135.2 million, or $34.7 million, net of tax, which can be carried back 3 years and forward for 5 years after realization, and Canadian capital loss carryforwards of $1.9 million, or $0.5 million, net of tax, which can be carried forward indefinitely. The Company also has gross U.S. state operating loss carryforwards with a potential benefit of $117.1 million, or $6.5 million, net of tax, that will expire between 2035 and 2055, and has foreign tax credit carryforwards with a potential tax benefit of $6.9 million that will expire between 2029 and 2035.
No additional income taxes have been provided for any remaining undistributed foreign earnings or foreign withholdings and U.S. state taxes not subject to the one-time transition tax under the 2017 Tax Cuts and Jobs Act (“TCJA”), as the Company intends to permanently reinvest the earnings from foreign subsidiaries outside of the United States. The amount of any unrecorded deferred tax liability is expected to be minimal due to the availability of the 100% dividends received deduction, along with insignificant state and withholding tax impacts.
During fiscal 2025 the Company paid federal, state and foreign income taxes, net of refunds received, of $175.3 million, $65.2 million, and $8.4 million, respectively.
Unrecognized Tax Benefits
The following table provides a reconciliation of the Company’s total balance of unrecognized tax benefits, excluding interest and penalties (in thousands):
| 2025 | 2024 | 2023 | |||||||||||||||
Beginning of fiscal year | $ | 6,250 | $ | 2,851 | $ | 1,058 | |||||||||||
Increase as a result of Foot Locker acquisition (1) | 29,863 | — | — | ||||||||||||||
Increases as a result of tax positions taken in a prior period | 1,961 | 3,201 | 1,463 | ||||||||||||||
Decreases as a result of tax positions taken in a prior period | (54) | (1,058) | — | ||||||||||||||
| Increases as a result of tax positions taken in the current period | 5,424 | 1,364 | — | ||||||||||||||
| Increases as a result of settlements during the current period | — | — | 364 | ||||||||||||||
Decreases as a result of settlements during the current period | (1,632) | (108) | (34) | ||||||||||||||
Reductions as a result of a lapse of statute of limitations during the current period | (1,578) | — | — | ||||||||||||||
End of fiscal year | $ | 40,234 | $ | 6,250 | $ | 2,851 | |||||||||||
(1)Fiscal 2025 includes foreign currency translation adjustments of $1.0 million.
The balance at January 31, 2026 includes $37.4 million of unrecognized tax benefits that would impact our effective tax rate if recognized. The Company recognizes accrued interest and penalties from unrecognized tax benefits in income tax expense.
As of January 31, 2026 the Company’s total liability for uncertain tax positions, including $4.5 million for interest and penalties, was approximately $35.6 million. The Company recorded an expense of $0.6 million during fiscal 2025, a benefit of $0.4 million during fiscal 2024 and an expense of $0.7 million during fiscal 2023 related to the accrual of interest and penalties in the Consolidated Statements of Income. The Company does not anticipate that changes in its unrecognized tax benefits will have a material impact on the Consolidated Statements of Income during fiscal 2026.
Audits
The Company participates in the Internal Revenue Service (“IRS”) Compliance Assurance Program (“CAP”). As part of CAP, tax years are audited on a contemporaneous basis so that all or most issues are resolved prior to the filing of the tax return. The IRS has completed examinations of 2024 and all prior tax years and is no longer subject to examination in any of its major state jurisdictions for years prior to 2020. The newly acquired Foot Locker segment also previously participated in the CAP program and the IRS has completed examinations of 2023 and all prior tax years. For the Foot Locker segment, the 2024 U.S. federal income tax year and the short-period US federal income tax return for 2025 related to the pre-acquisition period is currently under examination. The Foot Locker segment is no longer subject to examination in any of its material state jurisdictions for years prior to 2020.
Recent Tax Legislation
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”), which includes several measures affecting corporations and other business entities, was signed into law. Among these measures, the OBBBA modifies and permanently extends certain expiring provisions of the TCJA, including the restoration of 100% bonus depreciation, which was scheduled to phase out in 2027 under the TCJA. The OBBBA also permits immediate expensing of research and development expenditures previously capitalized under the TCJA. The legislation has multiple effective dates, with some provisions taking effect in 2025 and others phased in through 2027. In accordance with ASC 740, “Income Taxes,” the Company has recognized the effects of the OBBBA during the current year for the provisions currently enacted, which has increased the Company’s deferred tax liability. The Company has recognized the impacts of the OBBBA into the current and deferred income tax provision for fiscal 2025, resulting in reduced federal income tax liability and related tax payments, but no significant impact to the annual effective tax rate. The Company will continue to evaluate the future provisions and does not anticipate any significant impact to the financial statements.
The Organization for Economic Cooperation and Development introduced a framework to implement a global 15% minimum corporate tax (“Pillar Two”). The European Union issued a directive to its member states to enact the Pillar Two in their local laws effective after December 2023. A number of other countries have or are expected to implement similar legislation with effective dates in the future. During fiscal 2025, Pillar Two did not have a material -impact on the Company’s Financial Statements. The Company is continuing to evaluate the potential impact on future periods and does not currently anticipate that Pillar Two legislation will have a prospective material impact on the Company’s financial condition, results of operations, cash flows or disclosures.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | Mar 27, 2026 | Showing above |
| 2025 | Mar 27, 2025 | |
| 2024 | Mar 28, 2024 | |
| 2023 | Mar 23, 2023 | |
| 2022 | Mar 23, 2022 | |
| 2021 | Mar 24, 2021 | |
| 2020 | Mar 20, 2020 | |
| 2019 | Mar 29, 2019 | |
| 2018 | Mar 30, 2018 | |
| 2017 | Mar 24, 2017 | |
| 2016 | Mar 25, 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.