PAPA JOHNS INTERNATIONAL INCPZZA
PAPA JOHNS INTERNATIONAL INC Income Taxes Disclosure
17. Income Taxes
The following table presents the domestic and foreign components of income before income taxes for 2025, 2024 and 2023:
| (In thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| Domestic income | $ | 35,505 | $ | 126,681 | $ | 91,218 | ||||||||||||||
| Foreign income | 12,873 | (12,555) | 12,455 | |||||||||||||||||
| Total income | $ | 48,378 | $ | 114,126 | $ | 103,673 | ||||||||||||||
Included within the foreign income before income taxes above is $18.1 million, $19.4 million, and $24.1 million of foreign sourced income subject to foreign withholding taxes in 2025, 2024, and 2023, respectively.
A summary of the expense (benefit) for income tax follows:
| (In thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| Current: | ||||||||||||||||||||
| Federal | $ | 853 | $ | 22,443 | $ | 20,742 | ||||||||||||||
| Foreign | 6,422 | 6,844 | 3,916 | |||||||||||||||||
| State and local | 2,247 | 3,679 | 2,207 | |||||||||||||||||
| Deferred: | ||||||||||||||||||||
| Federal | 5,415 | (3,848) | (4,115) | |||||||||||||||||
| Foreign | (8) | 2,181 | (558) | |||||||||||||||||
| State and local | 1,332 | (1,370) | (1,318) | |||||||||||||||||
| Total income tax expense | $ | 16,261 | $ | 29,929 | $ | 20,874 | ||||||||||||||
The reconciliation of income tax computed at the U.S. federal statutory rate to income tax expense for the years ended December 28, 2025, December 29, 2024 and December 31, 2023 is as follows in both dollars and as a percentage of income before income taxes:
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | Income Tax Expense (Benefit) | Income Tax Rate | Income Tax Expense (Benefit) | Income Tax Rate | Income Tax Expense (Benefit) | Income Tax Rate | ||||||||||||||||||||||||||||||||
| Tax at U.S. federal statutory rate | $ | 10,160 | 21.0 | % | $ | 23,965 | 21.0 | % | $ | 21,771 | 21.0 | % | ||||||||||||||||||||||||||
| State and local income taxes, net of federal income tax effect | 2,792 | 5.8 | % | 1,609 | 1.4 | % | 737 | 0.7 | % | |||||||||||||||||||||||||||||
| Foreign income tax effects | ||||||||||||||||||||||||||||||||||||||
| United Kingdom | ||||||||||||||||||||||||||||||||||||||
| Valuation allowance | 686 | 1.4 | % | 6,571 | 5.8 | % | 1,519 | 1.5 | % | |||||||||||||||||||||||||||||
| Statutory rate difference between United Kingdom and United States | (205) | (0.4) | % | (1,254) | (1.1) | % | (443) | (0.4) | % | |||||||||||||||||||||||||||||
| Nondeductible lease surrender expenses | 600 | 1.2 | % | 1,805 | 1.6 | % | — | — | % | |||||||||||||||||||||||||||||
| Other | (16) | — | % | 823 | 0.7 | % | 103 | 0.1 | % | |||||||||||||||||||||||||||||
| Chili taxes withheld | 1,940 | 4.0 | % | 3,605 | 3.2 | % | 867 | 0.8 | % | |||||||||||||||||||||||||||||
| Peru taxes withheld | 1,101 | 2.3 | % | 406 | 0.3 | % | 614 | 0.6 | % | |||||||||||||||||||||||||||||
| Korea taxes withheld | 679 | 1.4 | % | 698 | 0.6 | % | 682 | 0.7 | % | |||||||||||||||||||||||||||||
| Other foreign income tax and taxes withheld at source | 2,580 | 5.3 | % | 2,786 | 2.4 | % | 2,219 | 2.1 | % | |||||||||||||||||||||||||||||
| Tax credits | ||||||||||||||||||||||||||||||||||||||
| Research & development credits | (490) | (1.0) | % | (1,794) | (1.6) | % | (2,650) | (2.6) | % | |||||||||||||||||||||||||||||
| FICA tax on tips credits | (2,363) | (4.9) | % | (2,517) | (2.2) | % | (3,008) | (2.9) | % | |||||||||||||||||||||||||||||
| Foreign tax credit | — | — | % | 995 | 0.9 | % | (3,566) | (3.5) | % | |||||||||||||||||||||||||||||
| Other federal tax credits | (521) | (1.1) | % | (8) | — | % | (560) | (0.6) | % | |||||||||||||||||||||||||||||
| Nontaxable and nondeductible items, net | ||||||||||||||||||||||||||||||||||||||
| Non-qualified deferred compensation plan expense (income) | (616) | (1.3) | % | (750) | (0.7) | % | (752) | (0.7) | % | |||||||||||||||||||||||||||||
| Excess tax (benefits) on equity awards | 1,822 | 3.8 | % | 913 | 0.8 | % | (697) | (0.7) | % | |||||||||||||||||||||||||||||
| Non-deductible executive compensation | 1,257 | 2.6 | % | (178) | (0.2) | % | 1,427 | 1.4 | % | |||||||||||||||||||||||||||||
| Deduction disallowed due to credit taken | 564 | 1.2 | % | 575 | 0.5 | % | 810 | 0.8 | % | |||||||||||||||||||||||||||||
| Other nontaxable and nondeductible items, net | (502) | (1.0) | % | (261) | (0.2) | % | 11 | — | % | |||||||||||||||||||||||||||||
| Effects of cross-border tax laws | ||||||||||||||||||||||||||||||||||||||
| Foreign-derived intangible income | 102 | 0.2 | % | (918) | (0.8) | % | (1,190) | (1.2) | % | |||||||||||||||||||||||||||||
| Foreign tax deduction | (1,329) | (2.8) | % | (1,657) | (1.4) | % | — | — | % | |||||||||||||||||||||||||||||
| Sec.987 Pre-Transition gain/loss | (1,753) | (3.6) | % | — | — | % | — | — | % | |||||||||||||||||||||||||||||
| US tax impact as a result of entity classification election | (594) | (1.2) | % | (4,734) | (4.2) | % | (88) | — | % | |||||||||||||||||||||||||||||
| Other adjustments | 331 | 0.7 | % | (150) | (0.1) | % | (520) | (0.5) | % | |||||||||||||||||||||||||||||
| Valuation allowance | — | — | % | (817) | (0.7) | % | 3,690 | 3.6 | % | |||||||||||||||||||||||||||||
| Changes to unrecognized benefits | 36 | — | % | 216 | 0.2 | % | (102) | (0.1) | % | |||||||||||||||||||||||||||||
| Total | $ | 16,261 | 33.6 | % | $ | 29,929 | 26.2 | % | $ | 20,874 | 20.1 | % | ||||||||||||||||||||||||||
State and local income taxes in Kentucky and Georgia for 2025; Kentucky, Florida, Georgia, California, Louisville Kentucky, New York, Texas, North Carolina, Indiana, Pennsylvania, New Jersey, Kansas and Tennessee for 2024; and Kentucky, Louisville Kentucky, California, Florida, Georgia, Texas, New York, Indiana, New Jersey, Kansas, Arizona, Minnesota, Tennessee, South Carolina and Illinois for 2023 comprise the majority of the state and local income taxes, net of federal effect category.
Significant deferred tax assets (liabilities) follow:
| (In thousands) | December 28, 2025 | December 29, 2024 | ||||||||||||
| Accrued liabilities | $ | 12,512 | $ | 12,660 | ||||||||||
| Accrued bonuses | 4,737 | 3,148 | ||||||||||||
| Other liabilities and asset reserves | 17,632 | 15,536 | ||||||||||||
| Equity awards | 6,391 | 7,542 | ||||||||||||
| Lease liabilities | 51,717 | 50,500 | ||||||||||||
| Other | 5,786 | 5,616 | ||||||||||||
| Net operating losses | 19,133 | 18,028 | ||||||||||||
| Foreign tax credit carryforwards | 23,071 | 23,071 | ||||||||||||
| Total deferred tax assets | 140,979 | 136,101 | ||||||||||||
| Valuation allowances | (48,167) | (44,463) | ||||||||||||
| Total deferred tax assets, net of valuation allowances | 92,812 | 91,638 | ||||||||||||
| Deferred expenses | (1,196) | (6,470) | ||||||||||||
| Accelerated depreciation | (29,088) | (19,144) | ||||||||||||
| Goodwill | (11,489) | (8,090) | ||||||||||||
| Right-of-use assets | (46,283) | (45,803) | ||||||||||||
| Other | (1,367) | (1,384) | ||||||||||||
| Total deferred tax liabilities | (89,423) | (80,891) | ||||||||||||
| Net deferred tax assets | $ | 3,389 | $ | 10,747 | ||||||||||
The following table summarizes changes in the Company’s valuation allowances on deferred tax (in thousands):
Balance at December 31, 2023 | $ | 37,609 | |||
| Charged to costs and expenses | 6,642 | ||||
| Other | 212 | ||||
Balance at December 29, 2024 | $ | 44,463 | |||
| Charged to costs and expenses | 3,163 | ||||
| Other | 541 | ||||
Balance at December 28, 2025 | $ | 48,167 | |||
The Company had approximately $12.3 million and $11.7 million of state deferred tax assets in separate company jurisdictions primarily related to state net operating loss carryforwards as of December 28, 2025 and December 29, 2024, respectively. Our ability to utilize these state deferred tax assets is dependent on our ability to generate earnings in future years in the respective state jurisdictions. The Company provided a full valuation allowance for these state deferred tax assets as we believe realization based on the more-likely-than-not criteria has not been met as of December 28, 2025 and December 29, 2024, respectively.
The Company had approximately $4.3 million and $3.8 million of state deferred tax assets related to state income tax credit carryforwards as of December 28, 2025 and December 29, 2024, respectively. Our ability to fully utilize these deferred tax assets related to state income tax credit carryforwards is dependent on our ability to generate earnings in future years in the respective state jurisdictions. The Company provided a partial valuation allowance of $2.1 million and $0.5 million against these state deferred tax assets at December 28, 2025 and December 29, 2024, respectively. We believe that a portion of these state income tax credit carryforwards would not be realizable before expiration.
The Company had approximately $10.5 million and $9.2 million of foreign net operating loss, capital loss carryovers and foreign deferred tax assets as of December 28, 2025 and December 29, 2024, respectively. The Company had approximately $10.5 million and $9.2 million of valuation allowances primarily related to the foreign net operating losses,
foreign capital losses and foreign deferred tax assets at both December 28, 2025 and December 29, 2024. A substantial majority of our foreign net operating losses do not have an expiration date.
In addition, the Company had approximately $23.1 million and $23.1 million in foreign tax credit carryforwards as of December 28, 2025 and December 29, 2024, respectively, that expire ten years from inception in years 2029 through 2035. Our ability to utilize these foreign tax credit carryforwards is dependent on our ability to generate foreign earnings in future years sufficient to claim foreign tax credits in excess of foreign taxes paid in those years. The Company provided a full valuation allowance for these foreign tax credit carryforwards as we believe realization based on the more-likely-than-not criteria has not been met as of December 28, 2025 and December 29, 2024, respectively.
The following table summarizes cash for income taxes paid:
| (In thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| Current: | ||||||||||||||||||||
| Federal | $ | 10,272 | $ | 26,175 | $ | 5,405 | ||||||||||||||
| Foreign | 4,949 | 7,014 | 4,405 | |||||||||||||||||
| State and local | 1,536 | 3,107 | 2,727 | |||||||||||||||||
| $ | 16,757 | $ | 36,296 | $ | 12,537 | |||||||||||||||
Income taxes paid (net of refunds) did not exceed 5% of total income taxes paid (net of refunds) for any separate State or local jurisdiction during the periods presented. Income taxes paid (net of refunds) exceeded 5% of total income taxes paid (net of refunds) in the following jurisdictions:
| (In thousands) | 2025 | 2024 | 2023 | ||||||||||||||||||||
| Foreign: | |||||||||||||||||||||||
| Chile | $ | 1,940 | $ | 3,605 | $ | 867 | |||||||||||||||||
| Peru | 1,101 | 406 | (a) | 614 | (a) | ||||||||||||||||||
| Korea | 679 | (a) | 698 | (a) | 683 | ||||||||||||||||||
| United Kingdom | (1,568) | (775) | (a) | — | (a) | ||||||||||||||||||
(a) Jurisdiction below threshold for period presented.
The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The Company, with few exceptions, is no longer subject to U.S. federal, state and local, or non-US income tax examinations by tax authorities for years before 2021. The Company is currently undergoing examinations by various tax authorities.
The Company had $1.3 million of unrecognized tax benefits at December 28, 2025 which, if recognized, would affect the effective tax rate. A reconciliation of the beginning and ending liability for unrecognized tax benefits excluding interest and penalties is as follows, which is recorded in Other long-term liabilities in the Consolidated Balance Sheets (in thousands):
Balance at December 31, 2023 | $ | 1,058 | |||
| Additions for tax positions of prior years | 276 | ||||
| Reductions for tax positions of prior years | (45) | ||||
Balance at December 29, 2024 | $ | 1,289 | |||
| Additions for tax positions of prior years | 65 | ||||
| Reductions for tax positions of prior years | (44) | ||||
Balance at December 28, 2025 | $ | 1,310 | |||
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as part of income tax expense. The Company has accrued approximately $0.2 million for the payment of interest and penalties as of December 28, 2025 and December 29, 2024.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 26, 2020 | |
| 2018 | Mar 8, 2019 | |
| 2017 | Feb 27, 2018 | |
| 2016 | Feb 21, 2017 | |
| 2015 | Feb 23, 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.