Performance Food Group Co Income Taxes Disclosure

13. Income Taxes

The determination of the Company’s overall effective tax rate requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. The effective tax rate reflects the income earned and taxed in various federal, state, and foreign jurisdictions. Tax law changes, increases and decreases in temporary and permanent differences between book and tax items, tax credits, and the Company’s change in income in each jurisdiction all affect the overall effective tax rate. It is the Company’s practice to recognize interest and penalties related to uncertain tax positions in income tax expense.

The Company’s effective income tax rate for continuing operations for fiscal 2025, fiscal 2024 and fiscal 2023 was 25.8%, 27.0%, and 27.0%, respectively. Actual income tax expense differs from the amount computed by applying the applicable U.S. federal statutory corporate income tax rate of 21% in fiscal 2025, fiscal 2024, and fiscal 2023 to earnings before income taxes as follows:

Deferred income taxes are recorded based upon the tax effects of differences between the financial statement and tax bases of assets and liabilities and available tax loss and credit carryforwards. Temporary differences and carry-forwards that created significant deferred tax assets and liabilities were as follows:

As of June 28, 2025, substantially all federal, state and local, and foreign income tax matters have been concluded for years prior to fiscal year 2021.

We intend to indefinitely reinvest income of our foreign operations and, as a result, no material accruals have been made with respect to the tax effects of unremitted earnings from these reinvested foreign earnings, including impacts of outside basis differences and withholding taxes.

Since the Organization for Economic Co-operation and Development ("OECD") announced the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting ("Framework") in 2021, a number of countries have begun to enact legislation to implement the OECD international tax framework, including the Pillar Two minimum tax regime. To mitigate the administrative burden for Multinational Enterprises in complying with the OECD Global Anti-Base Erosion rules during the initial years of implementation, the OECD developed the temporary “Transitional Country-by-Country Safe Harbor” ("Safe Harbor"). This transitional Safe Harbor applies for fiscal years beginning on or before December 31, 2026, but not including a fiscal year that ends after June 30, 2028. Under the Safe Harbor, the top-up tax for such jurisdiction is deemed to be zero, provided that at least one of the Safe Harbor tests is met for the jurisdiction. Of the regions in which we operate, Canada has implemented Pillar Two framework effective January 1, 2024. The Company is not subject to Pillar Two minimum tax in fiscal 2025 under the Safe Harbor rules.

On July 4, 2025, the President of the United States signed into law the One Big Beautiful Bill Act (the “Act”). The Act includes changes to U.S. tax law that will be applicable to the Company in fiscal 2026. The Act makes permanent key provisions of the Tax Cuts and Jobs Act, including bonus depreciation, expensing of domestic research costs and limitation of business interest expense. ASC 740, “Income Taxes,” requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the legislation is enacted. The Company is still evaluating the impact of the Act, and the results of such evaluations will be reflected in the Company’s form 10-Q for the period ending September 27, 2025.