HP INCHPQ
HP INC Income Taxes Disclosure
Taxes on Earnings
Provision for Taxes
The domestic and foreign components of earnings before taxes were as follows:
| For the fiscal years ended October 31 | |||||||||||||||||
| h | 2025 | 2024 | 2023 | ||||||||||||||
| In millions | |||||||||||||||||
| U.S. | $ | 107 | $ | 537 | $ | 650 | |||||||||||
| Non-U.S. | 2,561 | 2,742 | 2,287 | ||||||||||||||
| $ | 2,668 | $ | 3,279 | $ | 2,937 | ||||||||||||
The provision for (benefit from) taxes on earnings was as follows:
| For the fiscal years ended October 31 | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| In millions | |||||||||||||||||
| U.S. federal taxes: | |||||||||||||||||
| Current | $ | (188) | $ | 245 | $ | 226 | |||||||||||
| Deferred | (121) | 34 | (549) | ||||||||||||||
| Non-U.S. taxes: | |||||||||||||||||
| Current | 328 | 357 | 337 | ||||||||||||||
| Deferred | 95 | (193) | (305) | ||||||||||||||
| State taxes: | |||||||||||||||||
| Current | (13) | 33 | 42 | ||||||||||||||
| Deferred | 38 | 28 | (77) | ||||||||||||||
| $ | 139 | $ | 504 | $ | (326) | ||||||||||||
The differences between the U.S. federal statutory income tax rate and HP’s effective tax rate were as follows:
| For the fiscal years ended October 31 | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| U.S. federal statutory income tax rate from continuing operations | 21.0 | % | 21.0 | % | 21.0 | % | |||||||||||
| State income taxes, net of federal tax benefit | 2.4 | % | 2.2 | % | 1.7 | % | |||||||||||
| Impact of foreign earnings including GILTI and FDII, net | (2.9) | % | (1.0) | % | (1.1) | % | |||||||||||
| Research and development (“R&D”) credit | (2.3) | % | (1.1) | % | (1.0) | % | |||||||||||
| Valuation allowances | (2.5) | % | (7.1) | % | (7.3) | % | |||||||||||
| Uncertain tax positions and audit settlements | (10.2) | % | 1.0 | % | 2.4 | % | |||||||||||
Changes in tax laws or rates enacted | 1.4 | % | 0.3 | % | (0.3) | % | |||||||||||
| Impact of internal reorganization | — | % | — | % | (27.4) | % | |||||||||||
| Other, net | (1.7) | % | 0.1 | % | 0.9 | % | |||||||||||
| 5.2 | % | 15.4 | % | (11.1) | % | ||||||||||||
In fiscal year 2025, HP recorded $415 million of net income tax benefits related to non-recurring items in the provision for taxes. This amount included $273 million related to changes in uncertain tax positions, $80 million related to restructuring charges, $44 million related to changes in valuation allowances, $28 million related to the filing of tax returns in various jurisdictions, $22 million related to audit settlements in various jurisdictions, and $16 million related to litigation charges. These benefits were partially offset by $69 million of charges related to changes in tax rates.
In fiscal year 2024, HP recorded $214 million of net income tax benefits related to non-recurring items in the provision for taxes. This amount included $198 million related to changes in valuation allowances, $60 million related to restructuring charges, $14 million related to the filing of tax returns in various jurisdictions, and $11 million related to acquisition charges. These benefits were partially offset by $39 million of uncertain tax position charges and $25 million related to changes in tax rates.
In fiscal year 2023, HP recorded $1.1 billion of net income tax benefits related to non-recurring items in the provision for taxes. This amount included $726 million of tax effects related to internal reorganization, $255 million related to changes in valuation allowances, $101 million related to restructuring charges, $58 million related to the filing of tax returns in various jurisdictions, and $42 million related to acquisition charges. These benefits were partially offset by income tax charges of $60 million related to audit settlements in various jurisdictions, $27 million of uncertain tax position charges, and $25 million related to extinguishment of debt.
As a result of certain employment actions and capital investments HP has undertaken, income from manufacturing and services in certain countries is subject to reduced tax rates, and in some cases is wholly exempt from taxes, through 2029. The gross income tax benefits attributable to these actions and investments were estimated to be $153 million ($0.16 diluted net EPS) in fiscal year 2025, $217 million ($0.22 diluted net EPS) in fiscal year 2024 and $190 million ($0.19 diluted net EPS) in fiscal year 2023.
Uncertain Tax Positions
A reconciliation of unrecognized tax benefits is as follows:
| For the fiscal years ended October 31 | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| In millions | |||||||||||||||||
| Balance at beginning of year | $ | 1,217 | $ | 1,137 | $ | 1,045 | |||||||||||
| Increases: | |||||||||||||||||
| For current year’s tax positions | 85 | 82 | 61 | ||||||||||||||
| For prior years’ tax positions | 14 | 52 | 186 | ||||||||||||||
| Decreases: | |||||||||||||||||
| For prior years’ tax positions | (79) | (9) | (35) | ||||||||||||||
| Statute of limitations expirations | (338) | (33) | (8) | ||||||||||||||
| Settlements with taxing authorities | (34) | (12) | (112) | ||||||||||||||
| Balance at end of year | $ | 865 | $ | 1,217 | $ | 1,137 | |||||||||||
As of October 31, 2025, the amount of gross unrecognized tax benefits was $865 million, of which up to $656 million would affect HP’s effective tax rate if realized. Total gross unrecognized tax benefits decreased by $352 million for the twelve months ended October 31, 2025. HP recognizes interest income from favorable settlements and interest expense and penalties accrued on unrecognized tax benefits in the provision for taxes in the Consolidated Statements of Earnings. As of October 31, 2025, 2024 and 2023, HP had accrued $122 million, $135 million and $102 million, respectively, for interest and penalties.
HP engages in continuous discussions and negotiations with taxing authorities regarding tax matters in various jurisdictions. HP expects complete resolution of certain tax years with various tax authorities within the next 12 months. HP believes it is reasonably possible that its existing gross unrecognized tax benefits may be reduced by up to $42 million within the next 12 months, affecting HP’s effective tax rate if realized.
HP is subject to income tax in the United States and approximately 60 other countries and is subject to routine corporate income tax audits in many of these jurisdictions. In addition, HP is subject to numerous ongoing audits by federal, state and foreign tax authorities. The Internal Revenue Service (“IRS”) is conducting an audit of HP’s 2018 and 2019 income tax returns.
With respect to major state and foreign tax jurisdictions, HP is no longer subject to tax authority examinations for years prior to 2007. No material tax deficiencies have been assessed in major state or foreign tax jurisdictions related to ongoing audits as of October 31, 2025.
HP believes it has provided adequate reserves for all tax deficiencies or reductions in tax benefits that could result from federal, state and foreign tax audits. HP regularly assesses the likely outcomes of these audits in order to determine the appropriateness of HP’s tax provision. HP adjusts its uncertain tax positions to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular audit. However, income tax audits are inherently unpredictable and there can be no assurance that HP will accurately predict the outcome of these audits. The amounts ultimately paid on resolution of an audit
could be materially different from the amounts previously included in the Provision for taxes and therefore the resolution of one or more of these uncertainties in any particular period could have a material impact on net income or cash flows.
HP has not provided for U.S. federal income and foreign withholding taxes on $5.1 billion of undistributed earnings from non-U.S. operations as of October 31, 2025 because HP intends to reinvest such earnings indefinitely outside of the United States. Determination of the amount of unrecognized deferred tax liability related to these earnings is not practicable.
Deferred Income Taxes
The significant components of deferred tax assets and deferred tax liabilities were as follows:
| As of October 31 | |||||||||||
| 2025 | 2024 | ||||||||||
| In millions | |||||||||||
| Deferred tax assets: | |||||||||||
| Loss and credit carryforwards | $ | 6,792 | $ | 7,050 | |||||||
| Intercompany transactions—excluding inventory | 208 | 357 | |||||||||
| Fixed assets | 107 | 113 | |||||||||
| Warranty | 81 | 100 | |||||||||
| Employee and retiree benefits | 226 | 242 | |||||||||
| Deferred revenue | 244 | 240 | |||||||||
| Capitalized research and development | 1,187 | 1,014 | |||||||||
| Operating lease liabilities | 244 | 272 | |||||||||
| Investment in partnership | 672 | 710 | |||||||||
| Other | 393 | 395 | |||||||||
| Gross deferred tax assets | 10,154 | 10,493 | |||||||||
| Valuation allowances | (6,479) | (6,688) | |||||||||
| Total deferred tax assets | 3,675 | 3,805 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Unremitted earnings of foreign subsidiaries | (36) | (107) | |||||||||
| Right-of-use assets from operating leases | (211) | (235) | |||||||||
| Intangible assets | (121) | (159) | |||||||||
| Cash flow hedges | (5) | (24) | |||||||||
| Total deferred tax liabilities | (373) | (525) | |||||||||
| Net deferred tax assets | $ | 3,302 | $ | 3,280 | |||||||
Deferred tax assets and liabilities included in the Consolidated Balance Sheets as follows:
| As of October 31 | |||||||||||
| 2025 | 2024 | ||||||||||
| In millions | |||||||||||
| Deferred tax assets | $ | 3,318 | $ | 3,311 | |||||||
| Deferred tax liabilities | (16) | (31) | |||||||||
| Total | $ | 3,302 | $ | 3,280 | |||||||
As of October 31, 2025, HP had recorded deferred tax assets for net operating loss (“NOL”) carryforwards as follows:
| Gross NOLs | Deferred Taxes on NOLs | Valuation allowance | Initial Year of Expiration | ||||||||||||||||||||
| In millions | |||||||||||||||||||||||
| Federal | $ | 33 | $ | 7 | $ | (1) | 2026 | ||||||||||||||||
| State | 1,817 | 97 | (23) | 2026 | |||||||||||||||||||
| Foreign | 24,134 | 6,471 | (6,027) | 2028 | |||||||||||||||||||
| Balance at end of year | $ | 25,984 | $ | 6,575 | $ | (6,051) | |||||||||||||||||
As of October 31, 2025, HP had recorded deferred tax assets for various tax credit carryforwards as follows:
| Carryforward | Valuation Allowance | Initial Year of Expiration | |||||||||||||||
| In millions | |||||||||||||||||
| Tax credits in state and foreign jurisdictions | $ | 307 | $ | (61) | 2026 | ||||||||||||
| U.S. R&D and other credits | 52 | — | 2045 | ||||||||||||||
| Balance at end of year | $ | 359 | $ | (61) | |||||||||||||
Deferred Tax Asset Valuation Allowance
The deferred tax asset valuation allowance and changes were as follows:
| For the fiscal years ended October 31 | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| In millions | |||||||||||||||||
| Balance at beginning of year | $ | 6,688 | $ | 6,994 | $ | 7,592 | |||||||||||
| Income tax (benefit) expense | (230) | (300) | (650) | ||||||||||||||
| Goodwill, other comprehensive loss (income), currency translation and charges to other accounts | 21 | (6) | 52 | ||||||||||||||
| Balance at end of year | $ | 6,479 | $ | 6,688 | $ | 6,994 | |||||||||||
Gross deferred tax assets as of October 31, 2025, 2024, and 2023 were reduced by valuation allowances of $6.5 billion, $6.7 billion and $7.0 billion, respectively. In fiscal year 2025, the deferred tax asset valuation allowance decreased by $209 million primarily due to changes in tax rates in foreign jurisdictions. In fiscal year 2024, the deferred tax asset valuation allowance decreased by $306 million primarily due to an increase in the expected utilization of foreign net operating losses. In fiscal year 2023, the deferred tax asset valuation allowance decreased by $598 million primarily due to internal reorganization impacting foreign net operating losses and U.S. deferred tax assets that are anticipated to be realized at a lower effective rate than the federal statutory rate.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Dec 10, 2025 | Showing above |
| 2024 | Dec 13, 2024 | |
| 2023 | Dec 18, 2023 | |
| 2022 | Dec 6, 2022 | |
| 2016 | Dec 15, 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.