HASBRO, INC.HAS
HASBRO, INC. Income Taxes Disclosure
Income Taxes
The components of (Loss) earnings before income taxes, determined by tax jurisdiction, are as follows:
| (In millions) | 2025 | 2024 | 2023 | ||||||||||||||
| United States | $ | (160.8) | $ | 325.2 | $ | (356.9) | |||||||||||
| International | 58.8 | 171.8 | (1,352.2) | ||||||||||||||
Total (loss) earnings before income taxes | $ | (102.0) | $ | 497.0 | $ | (1,709.1) | |||||||||||
Income taxes attributable to (Loss) earnings before income taxes are:
| (In millions) | 2025 | 2024 | 2023 | ||||||||||||||
Current: | |||||||||||||||||
| United States | $ | 2.2 | $ | 47.0 | $ | (29.0) | |||||||||||
| State and local | (0.6) | 11.0 | (6.4) | ||||||||||||||
| International | 56.0 | 65.2 | 57.6 | ||||||||||||||
| 57.6 | 123.2 | 22.2 | |||||||||||||||
Deferred: | |||||||||||||||||
| United States | 125.9 | (2.2) | (36.3) | ||||||||||||||
| State and local | 21.3 | (9.7) | (3.0) | ||||||||||||||
| International | 11.4 | (8.7) | (204.2) | ||||||||||||||
| 158.6 | (20.6) | (243.5) | |||||||||||||||
| Total tax expense (benefit) | $ | 216.2 | $ | 102.6 | $ | (221.3) | |||||||||||
The following table presents the 2025 rate reconciliation between Income tax expense and statutory expectations, after the adoption of ASU 2023-09:
| 2025 | ||||||||||||||
| (In millions) | Amount | Percent | ||||||||||||
U.S. federal statutory tax rate | $ | (21.4) | 21.0 | % | ||||||||||
State and local income taxes, net of federal income tax effect(1) | 16.3 | (16.0) | ||||||||||||
Foreign tax effects | ||||||||||||||
Canada | ||||||||||||||
Difference in statutory tax rate | (0.3) | 0.3 | ||||||||||||
Quebec income taxes | 1.7 | (1.7) | ||||||||||||
Other | 0.6 | (0.6) | ||||||||||||
Switzerland | ||||||||||||||
Difference in statutory tax rate | (22.7) | 22.3 | ||||||||||||
Canton income taxes | 10.2 | (10.0) | ||||||||||||
Swiss deferred tax asset translation | (4.0) | 3.9 | ||||||||||||
Nontaxable income | (2.1) | 2.0 | ||||||||||||
Other | (0.7) | 0.7 | ||||||||||||
China | ||||||||||||||
Difference in statutory tax rate | 0.5 | (0.5) | ||||||||||||
Withholding tax | 8.0 | (7.8) | ||||||||||||
Other | 0.3 | (0.3) | ||||||||||||
Germany | ||||||||||||||
Difference in statutory tax rate | (0.1) | 0.1 | ||||||||||||
Pension adjustment | (1.3) | 1.3 | ||||||||||||
Other | (0.6) | 0.6 | ||||||||||||
United Kingdom | ||||||||||||||
Difference in statutory tax rate | 1.9 | (1.9) | ||||||||||||
Change in valuation allowance | 3.9 | (3.8) | ||||||||||||
Tax credits | (13.4) | 13.1 | ||||||||||||
Write-off of intangibles | 4.5 | (4.4) | ||||||||||||
Nondeductible expenses | 7.0 | (6.8) | ||||||||||||
Share-based compensation | (0.4) | 0.4 | ||||||||||||
Other | 0.6 | (0.6) | ||||||||||||
| 2025 | ||||||||||||||
| (In millions) | Amount | Percent | ||||||||||||
Mexico | ||||||||||||||
Difference in statutory tax rate | 3.3 | (3.2) | ||||||||||||
Nondeductible Items | 2.2 | (2.2) | ||||||||||||
Withholding tax | 2.0 | (2.0) | ||||||||||||
Other | 0.1 | (0.1) | ||||||||||||
Netherlands | ||||||||||||||
Difference in statutory tax rate | 0.1 | (0.1) | ||||||||||||
Nondeductible Items | 1.3 | (1.3) | ||||||||||||
Other Foreign Jurisdictions | 1.9 | (1.9) | ||||||||||||
Effect of cross-border tax laws | ||||||||||||||
Subpart F inclusion | 9.5 | (9.3) | ||||||||||||
Global Intangible Low-Taxed Income (GILTI), net of Sec. 250 deduction | 5.7 | (5.6) | ||||||||||||
Foreign-derived intangible income (FDII) deduction | (4.2) | 4.2 | ||||||||||||
Withholding tax | 1.6 | (1.6) | ||||||||||||
Tax credits | ||||||||||||||
Foreign tax credits | (14.2) | 13.9 | ||||||||||||
| Research & development tax credits | (6.4) | 6.3 | ||||||||||||
Change in valuation allowance | 5.4 | (5.3) | ||||||||||||
Changes in unrecognized tax benefits | 2.9 | (2.8) | ||||||||||||
Nontaxable or nondeductible items | ||||||||||||||
Goodwill impairment | 209.8 | (205.8) | ||||||||||||
Officer's compensation | 9.8 | (9.6) | ||||||||||||
Share-based compensation | 1.7 | (1.7) | ||||||||||||
Other | (1.9) | 1.8 | ||||||||||||
Other adjustments | ||||||||||||||
Post-disposition tax refund | (2.3) | 2.3 | ||||||||||||
Other | (0.6) | 0.6 | ||||||||||||
| Effective tax rate | $ | 216.2 | (212.1) | % | ||||||||||
(1) State taxes in California , New York and Tennessee made up the majority (greater than 50%) of the tax effect in this category.
The following table presents the reconciliation of the statutory United States federal income tax rate to Hasbro’s effective income tax rate during 2024 and 2023, prior to the adoption of ASU 2023-09:
| 2024 | 2023 | |||||||||||||
| Statutory income tax rate | 21.0 | % | 21.0 | % | ||||||||||
| State and local income taxes, net | 0.2 | 0.5 | ||||||||||||
| Tax on international earnings | 1.3 | 6.7 | ||||||||||||
| Domestic tax on foreign earnings | (4.0) | 1.3 | ||||||||||||
| Change in unrecognized tax benefits | — | (0.3) | ||||||||||||
| U.S. capital loss | 6.6 | 22.0 | ||||||||||||
| Change in valuation allowance | (4.5) | (23.3) | ||||||||||||
| Share-based compensation | 0.5 | (0.3) | ||||||||||||
| Research and development tax credits | (1.5) | 0.3 | ||||||||||||
| Officers' compensation | 0.9 | (0.3) | ||||||||||||
| Loss on disposal of business | 1.0 | (3.4) | ||||||||||||
Goodwill impairment | — | (11.8) | ||||||||||||
| Other, net | (0.8) | 0.5 | ||||||||||||
| Effective tax rate | 20.7 | % | 12.9 | % | ||||||||||
The effective income tax rate for 2025 was (212.1)% compared to 20.7% for 2024. The change in the effective income tax rate was primarily driven by a non-cash impairment of goodwill recorded in 2025 with no material tax benefit. The increase in the provision for income taxes was primarily due to U.S. Global Intangible Low-Taxed Income ("GILTI") and Subpart F inclusions, as well as additional valuation allowances generated in 2025.
Components of deferred income tax expense (benefit) arise from various temporary differences and relate to items included in the Consolidated Statements of Operations as well as items recognized in Other comprehensive earnings (loss).
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities as of December 28, 2025 and December 29, 2024 are as follows:
| (In millions) | 2025 | 2024 | |||||||||
| Deferred tax assets: | |||||||||||
| Loss and credit carryforwards | $ | 451.5 | $ | 426.6 | |||||||
| Depreciation and amortization of long-lived assets | 186.1 | 183.1 | |||||||||
| Other compensation | 46.4 | 51.9 | |||||||||
| Accounts receivable | 32.2 | 31.0 | |||||||||
Accrued expenses | 16.9 | 18.8 | |||||||||
| Inventories | 13.8 | 17.4 | |||||||||
Royalty expense | 10.1 | 3.8 | |||||||||
| Operating leases | 9.8 | 7.2 | |||||||||
| Pension | 7.3 | 7.3 | |||||||||
| Postretirement benefits | 5.8 | 5.7 | |||||||||
| Interest rate hedge | 4.2 | 4.4 | |||||||||
| Tax sharing agreement | 0.5 | 0.3 | |||||||||
| Deferred revenue | — | 0.3 | |||||||||
| Capitalized research and experimentation | — | 116.5 | |||||||||
| Interest expense limitation | — | 15.6 | |||||||||
| (In millions) | 2025 | 2024 | |||||||||
| Other | 3.1 | 0.8 | |||||||||
Deferred tax assets, gross | 787.7 | 890.7 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Depreciation and amortization of long-lived assets | 76.5 | 94.8 | |||||||||
Capitalized research and experimentation | 33.4 | — | |||||||||
| Operating leases | 6.4 | 4.9 | |||||||||
| Prepaid expenses | 5.5 | 4.1 | |||||||||
| Equity method investment | — | 1.9 | |||||||||
| Other | 12.0 | 14.6 | |||||||||
Deferred tax liabilities, gross | 133.8 | 120.3 | |||||||||
| Valuation allowance | (426.4) | (412.5) | |||||||||
Deferred income taxes, net | $ | 227.5 | $ | 357.9 | |||||||
As of December 28, 2025, the Company has loss and credit carryforwards of $451.5 million, compared to $426.6 million at December 29, 2024. The most significant amount of the loss and credit carryforwards as of December 28, 2025 and December 29, 2024 relates to U.S. capital losses of $338.4 million resulting from the sale of the eOne Film and TV business during 2023. Other significant loss and credit carryforwards relate to tax attributes of entities that have historically operated at losses in certain jurisdictions, as well as certain state tax attributes. The U.S. capital loss has a carryforward period of five years and will expire if not utilized before 2029. Some U.S. federal, state and international loss and credit carryforwards expire at various dates throughout 2026 while others have an indefinite carryforward period.
The recoverability of these future tax deductions and credits is evaluated by assessing the adequacy of future expected taxable income, of the appropriate character, from all sources, including taxable income in prior carryback years, reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies. To the extent the Company does not consider it more likely than not that a deferred tax asset will be recovered, a valuation allowance is generally established. To the extent that a valuation allowance was established and it is subsequently determined that it is more likely than not that the deferred tax assets will be recovered, the change in the valuation allowance is recognized in the Consolidated Statements of Operations.
The Company has a valuation allowance for certain net deferred tax assets at December 28, 2025 of $426.4 million, compared to $412.5 million at December 29, 2024. The change primarily pertains to adjustments to the U.S. capital loss resulting from the sale of the Company's eOne Film and TV business, for which the Company recorded a full valuation allowance as of December 28, 2025.
The movement in the deferred tax valuation allowance is as follows:
| (In millions) | 2025 | 2024 | |||||||||
Balance, beginning of period | $ | (412.5) | $ | (432.0) | |||||||
| Provisions/charges to income | (11.6) | 19.8 | |||||||||
Amounts charged to other accounts | 0.2 | (2.5) | |||||||||
| Foreign currency impact | (2.5) | 2.2 | |||||||||
Balance, end of period | $ | (426.4) | $ | (412.5) | |||||||
The Company’s net deferred income taxes are recorded in the Consolidated Balance Sheets as follows:
| (In millions) | 2025 | 2024 | |||||||||
| Other assets | $ | 286.8 | $ | 424.6 | |||||||
| Other liabilities | (59.3) | (66.7) | |||||||||
| Net deferred income taxes | $ | 227.5 | $ | 357.9 | |||||||
The Company has significant cash needs outside the U.S. and continues to consistently monitor and analyze its global working capital and cash requirements. However, we intend to repatriate substantially all of our accumulated
foreign earnings when appropriate. As of December 28, 2025, we have recorded $5.3 million of foreign withholding and U.S. state income tax liability. The Company has not finalized the timing of any actual cash distributions or the specific amounts and therefore we could still be subject to some additional foreign withholding taxes and U.S. state income taxes. We will record these additional tax effects, if any, in the period that we complete our analysis and are able to make a reasonable estimate.
A reconciliation of unrecognized tax benefits, excluding potential interest and penalties is as follows:
| (In millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Balance, beginning of period | $ | 36.1 | $ | 39.9 | $ | 77.8 | |||||||||||
| Gross increases in current period tax positions | 2.9 | 3.6 | 3.8 | ||||||||||||||
| Gross increases in prior period tax positions | 0.3 | 0.1 | 11.9 | ||||||||||||||
| Gross decrease from disposition | — | — | (10.4) | ||||||||||||||
| Gross decreases in prior period tax positions | — | (1.6) | (23.4) | ||||||||||||||
| Decreases related to settlements with tax authorities | — | (1.5) | (8.4) | ||||||||||||||
| Decreases from the expiration of statutes of limitations | (1.6) | (4.4) | (11.4) | ||||||||||||||
| Balance, end of period | $ | 37.7 | $ | 36.1 | $ | 39.9 | |||||||||||
Unrecognized tax benefits are recorded within Other liabilities, Prepaid expenses and Other current assets, and Other assets in the Company's Consolidated Balance Sheets. If recognized, these tax benefits may have affected our income tax provision for fiscal years 2025, 2024, and 2023 by approximately $47.0 million, $44.0 million, and $46.0 million, respectively.
During 2025, 2024, and 2023, the Company recognized $1.8 million, $2.9 million, and $5.8 million, respectively, of potential interest and penalties, which are included as a component of Income tax expense (benefit) on the Consolidated Statements of Operations. As of December 28, 2025, December 29, 2024, and December 31, 2023, the Company had accrued potential interest and penalties of $9.1 million, $7.7 million, and $6.2 million, respectively.
The Company and its subsidiaries file income tax returns in the U.S. and various state and international jurisdictions. In the normal course of business, the Company is regularly audited by U.S. federal, state and local and international tax authorities in various tax jurisdictions. The Company is no longer subject to U.S. federal income tax examinations for years before 2017. With few exceptions, the Company is no longer subject to U.S. state or local and non-U.S. income tax examinations by tax authorities in its major jurisdictions for years before 2016. The Company is currently under income tax examination by the Internal Revenue Service for the tax years 2017 and 2018 and in several U.S. state and local and non-U.S. jurisdictions.
The amount of cash taxes paid, net of refunds, by the Company during 2025 is as follows:
| (In millions) | 2025 | |||||||
U.S. federal | $ | 105.8 | ||||||
U.S. state and local (1) | 7.1 | |||||||
| Foreign | ||||||||
| United Kingdom | 35.3 | |||||||
| Mexico | 17.7 | |||||||
| China | 11.0 | |||||||
Other foreign jurisdictions | 19.9 | |||||||
| Total cash taxes paid, net of refunds | $ | 196.8 | ||||||
(1) No single state or local jurisdiction accounts for more than 5% of the total income taxes paid.
We are subject to income and other taxes in the U.S. (federal and state) and foreign jurisdictions. Changes to these laws or regulations may impact our tax liabilities. On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was signed into law with certain provisions effective in 2025 and other provisions becoming effective in 2026. The OBBBA provisions include the restoration of full expensing for domestic research and development expenses, reinstatement of accelerated depreciation on qualified capital expenditures, and modifications to the international tax framework, among other items. The OBBBA also provides for an election to accelerate the deduction of the remaining unamortized domestic research and development expenses capitalized previously. For fiscal year 2025,
the primary impact of the OBBBA to the Company was the accelerated expensing of domestic research and development costs which decreased our income eligible for foreign-derived intangible income ("FDII"), reduced our deferred tax assets, and reduced our current income tax liability. Other OBBBA changes did not have a material impact on the Company's consolidated financial statements in the current year, we are currently assessing the impact of OBBBA on the consolidated financial statements for future periods.
Tax laws are regularly being re-examined and evaluated globally. The Organisation for Economic Co-operation and Development ("OECD") has a framework to implement a global minimum corporate tax of 15% for companies with global revenues and profits above certain thresholds (referred to as "Pillar 2"), effective for tax years beginning in 2024. Many non-U.S. jurisdictions have enacted legislation into their domestic laws to align with the OECD's Pillar 2 framework. On January 5, 2026, the OECD introduced new guidance including a "Side-by-Side Safe Harbor" for U.S. and other multinational companies where domestic and international tax systems meet certain requirements to coexist with Pillar 2. Under the new guidance, US-parented companies would be exempt from certain aspects of the global minimum tax regime. The package includes a permanent simplified effective tax rate safe harbor and a substance-based tax incentive safe harbor. Additionally, the package extends the transitional country-by-country reporting safe harbor through to 2027. The updated model rules will need to be incorporated into local tax legislation to become effective. We will continue to evaluate the impacts of Pillar 2 in our non-U.S. tax jurisdictions. The Pillar 2 rules did not have a material impact on the Company's financial statements for 2024 and 2025.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Feb 22, 2023 | |
| 2021 | Feb 23, 2022 | |
| 2020 | Feb 24, 2021 | |
| 2019 | Feb 27, 2020 | |
| 2018 | Feb 26, 2019 | |
| 2017 | Feb 26, 2018 | |
| 2016 | Feb 22, 2017 | |
| 2015 | Feb 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.