DOMINOS PIZZA INC Income Taxes Disclosure
Income before provision for income taxes in 2025, 2024 and 2023 consisted of the following:
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
U.S. |
|
$ |
753,085 |
|
|
$ |
707,705 |
|
|
$ |
640,255 |
|
Foreign |
|
|
17,253 |
|
|
|
14,510 |
|
|
|
12,185 |
|
Income before provision for income taxes |
|
$ |
770,338 |
|
|
$ |
722,215 |
|
|
$ |
652,440 |
|
The components of the Company’s provision for income taxes and the effective tax rate for 2025, 2024 and 2023 are summarized as follows in the table below. The Company adopted ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures in the fourth quarter of 2025. The Company has included the relevant disclosures retrospectively for all periods presented in the consolidated financial statements.
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||||||||||||||
U.S. Federal income tax provision, |
|
$ |
161,771 |
|
|
|
21.0 |
% |
|
$ |
151,665 |
|
|
|
21.0 |
% |
|
$ |
137,012 |
|
|
|
21.0 |
% |
State and local income taxes, |
|
|
23,501 |
|
|
|
3.1 |
% |
|
|
22,546 |
|
|
|
3.1 |
% |
|
|
19,473 |
|
|
|
3.0 |
% |
Foreign tax effects |
|
|
29,558 |
|
|
|
3.8 |
% |
|
|
26,600 |
|
|
|
3.7 |
% |
|
|
25,301 |
|
|
|
3.9 |
% |
Nontaxable or nondeductible items |
|
|
7,307 |
|
|
|
0.9 |
% |
|
|
6,107 |
|
|
|
0.8 |
% |
|
|
5,040 |
|
|
|
0.8 |
% |
Changes in valuation allowances |
|
|
4,142 |
|
|
|
0.5 |
% |
|
|
3,918 |
|
|
|
0.5 |
% |
|
|
3,334 |
|
|
|
0.5 |
% |
Changes in unrecognized tax benefits |
|
|
(46 |
) |
|
|
0.0 |
% |
|
|
616 |
|
|
|
0.1 |
% |
|
|
16 |
|
|
|
0.0 |
% |
Effect of cross-border tax laws |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign derived intangible income deduction |
|
|
(16,800 |
) |
|
|
(2.2 |
)% |
|
|
(16,380 |
) |
|
|
(2.3 |
)% |
|
|
(17,850 |
) |
|
|
(2.7 |
)% |
Tax credits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign tax credits |
|
|
(29,558 |
) |
|
|
(3.8 |
)% |
|
|
(26,600 |
) |
|
|
(3.7 |
)% |
|
|
(23,582 |
) |
|
|
(3.6 |
)% |
Other credits |
|
|
(3,887 |
) |
|
|
(0.5 |
)% |
|
|
(5,856 |
) |
|
|
(0.8 |
)% |
|
|
(5,440 |
) |
|
|
(0.8 |
)% |
Other adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Excess tax benefits from equity-based compensation |
|
|
(3,158 |
) |
|
|
(0.4 |
)% |
|
|
(22,241 |
) |
|
|
(3.1 |
)% |
|
|
(3,397 |
) |
|
|
(0.5 |
)% |
Other |
|
|
(4,196 |
) |
|
|
(0.5 |
)% |
|
|
(2,330 |
) |
|
|
(0.2 |
)% |
|
|
(6,585 |
) |
|
|
(1.2 |
)% |
Provision for income taxes |
|
$ |
168,634 |
|
|
|
21.9 |
% |
|
$ |
138,045 |
|
|
|
19.1 |
% |
|
$ |
133,322 |
|
|
|
20.4 |
% |
(1) |
|
California, New York, Florida, Illinois, New Jersey, Minnesota and New York City made up the majority (greater than 50%) of this category in each of the years presented, with the addition of Oregon for 2025. |
Excess tax benefits from equity-based compensation activity resulted in a decrease in the Company’s provision for income taxes of $3.2 million, $22.2 million and $3.4 million in 2025, 2024 and 2023, respectively, primarily due to the recognition of excess tax benefits for options exercised and the vesting of equity awards.
The components of the 2025, 2024 and 2023 consolidated provision for income taxes were as follows:
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Provision for Federal income taxes |
|
|
|
|
|
|
|
|
|
|||
Current provision |
|
$ |
107,796 |
|
|
$ |
95,376 |
|
|
$ |
100,287 |
|
Deferred provision (benefit) |
|
|
1,503 |
|
|
|
(8,816 |
) |
|
|
(16,467 |
) |
Total provision for Federal income taxes |
|
|
109,299 |
|
|
|
86,560 |
|
|
|
83,820 |
|
Provision for state and local income taxes |
|
|
|
|
|
|
|
|
|
|||
Current provision |
|
|
29,992 |
|
|
|
25,186 |
|
|
|
27,243 |
|
Deferred benefit |
|
|
(215 |
) |
|
|
(301 |
) |
|
|
(2,991 |
) |
Total provision for state and local income taxes |
|
|
29,777 |
|
|
|
24,885 |
|
|
|
24,252 |
|
Provision for non-resident withholding and foreign income taxes |
|
|
|
|
|
|
|
|
|
|||
Current provision |
|
|
29,558 |
|
|
|
26,600 |
|
|
|
25,301 |
|
Deferred benefit |
|
|
— |
|
|
|
— |
|
|
|
(51 |
) |
Total provision for non-resident withholding and foreign income taxes |
|
|
29,558 |
|
|
|
26,600 |
|
|
|
25,250 |
|
Provision for income taxes |
|
$ |
168,634 |
|
|
$ |
138,045 |
|
|
$ |
133,322 |
|
As of December 28, 2025 and December 29, 2024, the significant components of net deferred income taxes were as follows in the table below. Certain prior period disclosure amounts have been reclassified to conform to the current presentation.
|
|
December 28, |
|
|
December 29, |
|
||
Deferred income tax assets |
|
|
|
|
|
|
||
Operating lease liabilities |
|
$ |
56,880 |
|
|
$ |
55,538 |
|
Foreign tax credit |
|
|
25,112 |
|
|
|
20,970 |
|
Insurance reserves |
|
|
12,005 |
|
|
|
11,800 |
|
Accrued compensation |
|
|
11,129 |
|
|
|
11,918 |
|
Non-cash equity-based compensation expense |
|
|
9,803 |
|
|
|
10,354 |
|
Contract liabilities |
|
|
7,065 |
|
|
|
6,760 |
|
Accruals and reserves |
|
|
4,563 |
|
|
|
4,276 |
|
Other |
|
|
6,847 |
|
|
|
4,385 |
|
Deferred income tax assets before valuation allowance |
|
|
133,404 |
|
|
|
126,001 |
|
Less, valuation allowance |
|
|
(26,348 |
) |
|
|
(22,359 |
) |
Deferred income tax assets, net |
|
|
107,056 |
|
|
|
103,642 |
|
Deferred income tax liabilities |
|
|
|
|
|
|
||
Operating lease right-of-use assets |
|
|
53,935 |
|
|
|
52,684 |
|
Capitalized software |
|
|
17,948 |
|
|
|
8,535 |
|
Depreciation, amortization and asset basis differences |
|
|
9,585 |
|
|
|
9,103 |
|
Unrealized gain on investments |
|
|
3,487 |
|
|
|
9,888 |
|
Deferred income tax liabilities |
|
|
84,955 |
|
|
|
80,210 |
|
Net deferred income taxes |
|
$ |
22,101 |
|
|
$ |
23,432 |
|
Realization of the Company’s deferred tax assets is dependent upon many factors, including, but not limited to, the Company’s ability to generate sufficient taxable income. Although realization of the Company’s deferred tax assets is not assured, on an ongoing basis, management assesses whether it remains more likely than not the deferred tax assets will be realized.
As of December 28, 2025 and December 29, 2024, the Company had total foreign tax credits of $25.1 million and $21.0 million, respectively, which were fully offset with a corresponding valuation allowance. As of December 28, 2025 and December 29, 2024, the Company also had valuation allowances related to interest deductibility in separately filed states of $1.2 million and $1.4 million, respectively. Management believes the remaining deferred tax assets will be realized. For financial reporting purposes, the Company’s investment in foreign subsidiaries does not exceed its tax basis. Therefore, no deferred income taxes have been provided.
The Company recognizes the financial statement benefit of a tax position if it is more likely than not that the position is sustainable, based solely on its technical merits and consideration of the relevant taxing authorities widely understood administrative practices and precedents. For tax positions meeting the “more likely than not” threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company recognizes accrued interest related to unrecognized tax benefits in interest expense and recognizes penalties in income tax expense.
A reconciliation of the beginning and ending amount of unrecognized tax benefits as of December 28, 2025, December 29, 2024 and December 31, 2023 is as follows:
|
|
December 28, |
|
|
December 29, |
|
|
December 31, |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Unrecognized tax benefits at beginning of period |
|
$ |
4,534 |
|
|
$ |
3,918 |
|
|
$ |
3,902 |
|
Additions for tax positions of current year |
|
|
649 |
|
|
|
1,039 |
|
|
|
961 |
|
Additions for tax positions of prior years |
|
|
193 |
|
|
|
241 |
|
|
|
503 |
|
Reductions for changes in prior year tax positions |
|
|
— |
|
|
|
— |
|
|
|
(551 |
) |
Reductions for lapses of applicable statute of limitations |
|
|
(888 |
) |
|
|
(664 |
) |
|
|
(897 |
) |
Unrecognized tax benefits at end of period |
|
$ |
4,488 |
|
|
$ |
4,534 |
|
|
$ |
3,918 |
|
As of December 28, 2025, the amount of unrecognized tax benefits was $4.5 million of which, if ultimately recognized, $4.5 million would be recognized as an income tax benefit and reduce the Company’s effective tax rate. As of December 28, 2025, the Company had $0.7 million of accrued interest and no accrued penalties.
As of December 29, 2024, the amount of unrecognized tax benefits was $4.5 million of which, if ultimately recognized, $4.5 million would be recognized as an income tax benefit and reduce the Company’s effective tax rate. As of December 29, 2024, the Company had $0.6 million of accrued interest and no accrued penalties.
There are currently no Internal Revenue Service audits in progress for the Company. The Company continues to be under examination by certain states. The Company’s Federal statute of limitation has expired for years prior to 2022, but it varies for state and foreign locations. The Company believes appropriate provisions for all outstanding tax issues have been made for all jurisdictions and all open years.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 23, 2026 | Showing above |
| 2024 | Feb 24, 2025 | |
| 2023 | Feb 23, 2023 | |
| 2022 | Mar 1, 2022 | |
| 2021 | Feb 25, 2021 | |
| 2019 | Feb 20, 2020 | |
| 2018 | Feb 21, 2019 | |
| 2017 | Feb 20, 2018 | |
| 2016 | Feb 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.