FIVE BELOW, INCFIVE
FIVE BELOW, INC Income Taxes Disclosure
Income Taxes
Deferred income taxes reflect the net tax effects of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon generation of future taxable income during the periods in which temporary differences representing net future deductible amounts become deductible.
As of January 31, 2026, there were no material valuation allowances that have been provided for net deferred tax assets as management believes that it is more likely than not that the Company will realize all material deferred tax assets before any expirations as of January 31, 2026.
The components of the income tax expense are as follows (in thousands):
| Fiscal Year | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 103,202 | $ | 73,565 | $ | 70,615 | |||||||||||
| State | 28,404 | 18,341 | 21,788 | ||||||||||||||
| 131,606 | 91,906 | 92,403 | |||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | (7,238) | (7,312) | 8,052 | ||||||||||||||
| State | (2,638) | 460 | (460) | ||||||||||||||
| (9,876) | (6,852) | 7,592 | |||||||||||||||
| Income tax expense | $ | 121,730 | $ | 85,054 | $ | 99,995 | |||||||||||
The reconciliation of the statutory federal income tax rate to the Company’s effective income tax rate is as follows (dollars in thousands):
| Fiscal 2025 | |||||||||||
| Amount | Percent | ||||||||||
| $ | 100,878 | 21.0 | % | ||||||||
State and local income taxes, net of federal income tax effect (1) | 19,264 | 4.0 | % | ||||||||
| Foreign tax effects | 32 | — | % | ||||||||
| Tax credits | (3,274) | (0.7) | % | ||||||||
| Nontaxable or non-deductible items | |||||||||||
| Non-deductible compensation | 5,281 | 1.1 | % | ||||||||
| Other | (1,802) | (0.4) | % | ||||||||
| Changes in unrecognized tax benefits | 1,088 | 0.2 | % | ||||||||
| Other | 263 | 0.1 | % | ||||||||
| $ | 121,730 | 25.3 | % | ||||||||
(1)State and Local Taxes in California, New York, Illinois, Texas, New York City, and New Jersey make up the majority of this category.
As previously disclosed for fiscal 2024 and fiscal 2023, prior to the adoption of ASU 2023-09, the reconciliation of the statutory federal income tax rate to the Company’s effective income tax rate is as follows:
| Fiscal Year | |||||||||||
| 2024 | 2023 | ||||||||||
| 21.0% | 21.0% | ||||||||||
| State taxes, net of federal benefit | 3.8% | 3.8% | |||||||||
| Other | 0.3% | 0.1% | |||||||||
| 25.1% | 24.9% | ||||||||||
The effective tax rate for fiscal 2025 compared to fiscal 2024 was primarily driven by non-deductible expenses, partially offset by discrete items, which includes the impact of share-based accounting. The effective tax rate for fiscal 2024 compared to fiscal 2023 was primarily driven by discrete items, which includes the impact of share-based accounting, partially offset by non-deductible expenses.
The amounts of income taxes paid, net of refunds is as follows:
| Fiscal 2025 | |||||
| Amount | |||||
| U.S federal | $ | 98,760 | |||
U.S state and local (1) | 28,853 | ||||
| $ | 127,613 | ||||
(1)No states have met the disclosure requirements outlined in ASU 2023-09
The tax effects of temporary differences that give rise to deferred tax assets and liabilities are (in thousands):
| January 31, 2026 | February 1, 2025 | ||||||||||
| Deferred tax assets: | |||||||||||
| Net operating loss carryforwards | $ | 61 | $ | 155 | |||||||
| Inventories | 26,864 | 24,259 | |||||||||
| Deferred revenue | 6,251 | 5,220 | |||||||||
| Accrued bonus | 11,083 | 2,129 | |||||||||
| Operating lease liabilities | 526,680 | 513,464 | |||||||||
| Other | 15,758 | 11,438 | |||||||||
| Deferred tax assets | 586,697 | 556,665 | |||||||||
| Valuation allowance | (1,442) | (1,442) | |||||||||
| Deferred tax assets, net of valuation allowance | 585,255 | 555,223 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Property and equipment | (175,695) | (170,871) | |||||||||
| Operating lease assets | (457,564) | (442,098) | |||||||||
| Other | (2,011) | (2,145) | |||||||||
| Deferred tax liabilities | (635,270) | (615,114) | |||||||||
| $ | (50,015) | $ | (59,891) | ||||||||
The Company had no material accrual for uncertain tax positions or interest or penalties related to income taxes on the Company’s balance sheets as of January 31, 2026 and February 1, 2025, and has not recognized any material uncertain tax positions or interest and/or penalties related to income taxes in the consolidated statements of operations for fiscal 2025, fiscal 2024, or fiscal 2023.
The Company files a federal income tax return as well as state tax returns. The Company’s U.S. federal income tax returns for the fiscal years ended January 28, 2023 and thereafter remain subject to examination by the U.S. Internal Revenue Service. State returns are filed in various state jurisdictions, as appropriate, with varying statutes of limitation and remain subject to examination for varying periods up to years to four years depending on the state.
On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was signed into law. The OBBBA contains numerous amendments to federal income tax provisions and has varying effective dates. The Company has evaluated and incorporated the effects of the legislation in its income tax provision for the fiscal year ended January 31, 2026. The legislation did not have a material impact on the Company's effective tax rate but results in a reduction to the Company's tax liability position for the fiscal year ended January 31, 2026.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | Mar 19, 2026 | Showing above |
| 2025 | Mar 20, 2025 | |
| 2024 | Mar 21, 2024 | |
| 2023 | Mar 16, 2023 | |
| 2022 | Mar 30, 2022 | |
| 2021 | Mar 18, 2021 | |
| 2020 | Mar 19, 2020 | |
| 2019 | Mar 28, 2019 | |
| 2018 | Mar 22, 2018 | |
| 2017 | Mar 23, 2017 | |
| 2016 | Mar 24, 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.