HOME DEPOT, INC.HD
HOME DEPOT, INC. Income Taxes Disclosure
INCOME TAXES
Provision for Income Taxes and Income Taxes Paid
The following table presents our earnings before the provision for income taxes:
| in millions | Fiscal | Fiscal | Fiscal | ||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| United States | $ | 17,431 | $ | 18,119 | $ | 18,681 | |||||||||||
| Foreign | 1,171 | 1,287 | 1,243 | ||||||||||||||
| Total | $ | 18,602 | $ | 19,406 | $ | 19,924 | |||||||||||
The following table presents our provision for income taxes:
| in millions | Fiscal | Fiscal | Fiscal | ||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 2,812 | $ | 3,417 | $ | 3,764 | |||||||||||
| State | 725 | 836 | 882 | ||||||||||||||
| Foreign | 414 | 386 | 365 | ||||||||||||||
| Total current | 3,951 | 4,639 | 5,011 | ||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | 503 | (67) | (228) | ||||||||||||||
| State | 46 | 25 | 12 | ||||||||||||||
| Foreign | (54) | 3 | (14) | ||||||||||||||
| Total deferred | 495 | (39) | (230) | ||||||||||||||
Provision for income taxes: | |||||||||||||||||
| Federal | 3,315 | 3,350 | 3,536 | ||||||||||||||
| State | 771 | 861 | 894 | ||||||||||||||
| Foreign | 360 | 389 | 351 | ||||||||||||||
Total | $ | 4,446 | $ | 4,600 | $ | 4,781 | |||||||||||
The following table presents the reconciliation of our provision for income taxes at the federal statutory rate of 21% to the actual tax expense as well as our effective tax rate:
| Fiscal | Fiscal | Fiscal | |||||||||||||||||||||||||||||||||
| in millions | 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||
Amount | Percent | Amount | Percent | Amount | Percent | ||||||||||||||||||||||||||||||
U.S. federal statutory income tax rate | $ | 3,906 | 21.0 | % | $ | 4,075 | 21.0 | % | $ | 4,184 | 21.0 | % | |||||||||||||||||||||||
State and local income taxes, net of federal income tax effect (1) | 663 | 3.6 | 701 | 3.6 | 698 | 3.5 | |||||||||||||||||||||||||||||
Foreign tax effects | 190 | 1.0 | 164 | 0.8 | 133 | 0.7 | |||||||||||||||||||||||||||||
Tax credits | (142) | (0.8) | (150) | (0.8) | (142) | (0.7) | |||||||||||||||||||||||||||||
Other adjustments (2) | (171) | (0.9) | (190) | (1.0) | (92) | (0.5) | |||||||||||||||||||||||||||||
| Total | $ | 4,446 | 23.9 | % | $ | 4,600 | 23.7 | % | $ | 4,781 | 24.0 | % | |||||||||||||||||||||||
—————
Note: Certain percentages may not sum to totals due to rounding.
(1) State taxes in California, Illinois, Massachusetts, New Jersey and New York made up the majority (greater than 50 percent) of the tax effect in this category.
(2) Includes immaterial activities in nontaxable or nondeductible items, cross-border tax laws, and changes in unrecognized tax benefits. The Company had no activity in changes in federal tax laws or rates enacted in the current period or changes in federal valuation allowances.
The following table presents income taxes paid:
| in millions | Fiscal | Fiscal | Fiscal | ||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Federal | $ | 3,590 | $ | 2,475 | $ | 3,737 | |||||||||||
Domestic state and local: | |||||||||||||||||
California | * | 186 | * | ||||||||||||||
Other | 799 | 606 | 854 | ||||||||||||||
Domestic state and local subtotal | 799 | 792 | 854 | ||||||||||||||
Foreign | 459 | 386 | 432 | ||||||||||||||
Total income taxes paid | $ | 4,848 | $ | 3,653 | $ | 5,023 | |||||||||||
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* The amount of income taxes paid during the year does not meet the 5% disaggregation threshold.
On July 4, 2025, the OBBBA was signed into law in the U.S., which contains a broad range of tax provisions, including the allowance to expense 100% of the cost of qualified property and immediate expensing of domestic research and experimental expenditures. The provisions of the OBBBA did not have a material impact to our fiscal 2025 effective tax rate. We have realized a reduction in our fiscal 2025 cash tax payments due to the above mentioned provisions.
In fiscal 2024, the IRS provided automatic income tax relief to taxpayers in certain southeastern states, extending the timeline to make certain tax payments. As a result, our fourth quarter fiscal 2024 estimated federal tax payment was deferred and paid in the first quarter of fiscal 2025.
Deferred Taxes
The following table presents the tax effects of temporary differences that give rise to significant portions of our deferred tax assets and deferred tax liabilities:
| in millions | February 1, 2026 | February 2, 2025 | |||||||||
| Assets: | |||||||||||
| Deferred compensation | $ | 289 | $ | 230 | |||||||
| Accrued self-insurance liabilities | 262 | 271 | |||||||||
| State income taxes | 118 | 133 | |||||||||
| Non-deductible reserves | 450 | 475 | |||||||||
| Net operating losses | 95 | 92 | |||||||||
| Lease liabilities | 2,358 | 2,255 | |||||||||
| Deferred revenue | 265 | 259 | |||||||||
| Other | 79 | 77 | |||||||||
| Total deferred tax assets | 3,916 | 3,792 | |||||||||
| Valuation allowance | (6) | (4) | |||||||||
| Total deferred tax assets, net of valuation allowance | 3,910 | 3,788 | |||||||||
| Liabilities: | |||||||||||
| Merchandise inventories | (26) | (12) | |||||||||
| Property and equipment | (1,514) | (854) | |||||||||
Intangible assets and goodwill | (2,438) | (2,200) | |||||||||
| Lease right-of-use assets | (2,276) | (2,178) | |||||||||
| Tax on unremitted earnings | (42) | (54) | |||||||||
| Other | (167) | (183) | |||||||||
| Total deferred tax liabilities | (6,463) | (5,481) | |||||||||
| Net deferred tax liabilities | $ | (2,553) | $ | (1,693) | |||||||
The following table presents our deferred tax assets and deferred tax liabilities, netted by tax jurisdiction, as presented on the consolidated balance sheets:
| in millions | Consolidated Balance Sheet Classification | February 1, 2026 | February 2, 2025 | ||||||||||||||
| Deferred tax assets | Other assets | $ | 292 | $ | 269 | ||||||||||||
| Deferred tax liabilities | Deferred income taxes | (2,845) | (1,962) | ||||||||||||||
| Net deferred tax liabilities | $ | (2,553) | $ | (1,693) | |||||||||||||
As of February 1, 2026, we recorded immaterial amounts of deferred tax assets for net operating losses as well as tax credits, primarily related to state jurisdictions. These losses and credits expire at various dates beginning in fiscal 2026. We have concluded that it is more likely than not that tax benefits related to substantially all net operating losses and tax credits will be realized based upon the expectation that we will generate the necessary taxable income in future periods. The overall change in our valuation allowance was not material in fiscal 2025.
Reinvestment of Unremitted Earnings
Substantially all of our current year foreign cash earnings in excess of working capital and cash needed for strategic investments are not intended to be indefinitely reinvested offshore. Therefore, the tax effects of repatriation for applicable state taxes and foreign withholding taxes of such cash earnings have been provided for in the accompanying consolidated statements of earnings. We have the intent and ability to reinvest substantially all non-cash unremitted earnings of our non-U.S. subsidiaries indefinitely. Accordingly, no provision for state taxes or foreign withholding taxes was recorded on these unremitted earnings in the accompanying consolidated statements of earnings. It is impracticable for us to determine the amount of unrecognized deferred tax liabilities on these indefinitely reinvested earnings due to the complexities associated with the hypothetical calculation.
Tax Return Examination Status
Our income tax returns are routinely examined by U.S. federal, state and local, and foreign tax authorities. The Company remains subject to U.S. federal income tax examination for fiscal years 2015 through 2024, with the IRS currently examining our U.S. federal income tax returns for fiscal years 2016 through 2021. There are also ongoing U.S. state and local audits and other foreign audits covering fiscal years 2013 through 2023. We do not expect the results from any ongoing income tax audit to have a material impact on our consolidated financial condition, results of operations, or cash flows.
Unrecognized Tax Benefits
The following table reconciles the beginning and ending amount of our gross unrecognized tax benefits:
| in millions | Fiscal | Fiscal | Fiscal | ||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Unrecognized tax benefits balance at beginning of fiscal year | $ | 627 | $ | 689 | $ | 643 | |||||||||||
| Additions based on tax positions related to the current year | 67 | 71 | 74 | ||||||||||||||
| Additions for tax positions of prior years | 11 | 3 | 13 | ||||||||||||||
| Reductions for tax positions of prior years | (71) | (42) | (14) | ||||||||||||||
| Reductions due to settlements | (33) | (51) | — | ||||||||||||||
| Reductions due to lapse of statute of limitations | (42) | (43) | (27) | ||||||||||||||
| Unrecognized tax benefits balance at end of fiscal year | $ | 559 | $ | 627 | $ | 689 | |||||||||||
Unrecognized tax benefits that, if recognized, would affect our annual effective income tax rate were $464 million, $509 million, and $568 million at February 1, 2026, February 2, 2025, and January 28, 2024, respectively.
Interest and Penalties
Interest and penalties associated with uncertain tax positions recognized in the consolidated statements of earnings were immaterial in fiscal 2025, fiscal 2024, and fiscal 2023. Our total accrued interest and penalties associated with uncertain tax positions were immaterial as of February 1, 2026 and February 2, 2025.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | Mar 18, 2026 | Showing above |
| 2025 | Mar 21, 2025 | |
| 2024 | Mar 13, 2024 | |
| 2023 | Mar 15, 2023 | |
| 2022 | Mar 23, 2022 | |
| 2021 | Mar 24, 2021 | |
| 2020 | Mar 25, 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.