BOSTON BEER CO INC Income Taxes Disclosure
L. Income Taxes
During the period ended December 27, 2025, the Company adopted ASU 2023-09—Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances income tax disclosures, primarily related to the rate reconciliation and income taxes paid. The Company is applying ASU 2023‑09 on a prospective basis. As a result, for certain reconciliations presented in the income taxes footnote, comparative information for 2024 and 2023 is presented in a separate table.
Income before income taxes on which the provision for income taxes was computed was as follows:
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
|
|
(in thousands) |
|
|||||||||
Domestic |
|
$ |
157,651 |
|
|
$ |
91,218 |
|
|
$ |
111,247 |
|
Foreign |
|
|
(4,191 |
) |
|
|
(3,616 |
) |
|
|
(1,659 |
) |
Total |
|
$ |
153,460 |
|
|
$ |
87,602 |
|
|
$ |
109,588 |
|
Significant components of the income tax provision for fiscal 2025, 2024, and 2023 were as follows:
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
|
|
(in thousands) |
|
|||||||||
Current: |
|
|
|
|
|
|
|
|
|
|||
Federal |
|
$ |
36,364 |
|
|
$ |
37,971 |
|
|
$ |
36,556 |
|
State |
|
|
9,144 |
|
|
|
9,880 |
|
|
|
7,650 |
|
Foreign |
|
|
635 |
|
|
|
— |
|
|
|
— |
|
Total current |
|
|
46,143 |
|
|
|
47,851 |
|
|
|
44,206 |
|
Deferred: |
|
|
|
|
|
|
|
|
|
|||
Federal |
|
|
(2,220 |
) |
|
|
(17,175 |
) |
|
|
(10,816 |
) |
State |
|
|
1,068 |
|
|
|
(2,769 |
) |
|
|
(52 |
) |
Total deferred |
|
|
(1,152 |
) |
|
|
(19,944 |
) |
|
|
(10,868 |
) |
Total income tax provision |
|
$ |
44,991 |
|
|
$ |
27,907 |
|
|
$ |
33,338 |
|
A reconciliation to statutory rates for fiscal 2025, after the adoption of ASU 2023-09 is as follows:
|
|
2025 |
|
|||||
|
|
Amount |
|
|
Percentage |
|
||
|
|
(in thousands) |
|
|
|
|
||
U.S. federal statutory rate |
|
$ |
32,183 |
|
|
|
21.0 |
% |
State and local income taxes, net of federal income tax effect |
|
|
8,111 |
|
|
|
5.2 |
|
Foreign tax effects |
|
|
|
|
|
|
||
Canada |
|
|
|
|
|
|
||
Other |
|
|
1,606 |
|
|
|
0.9 |
|
Tax credits |
|
|
|
|
|
|
||
Federal tax credits |
|
|
(1,227 |
) |
|
|
(0.8 |
) |
Changes in valuation allowances |
|
|
637 |
|
|
|
0.4 |
|
Nontaxable or nondeductible items |
|
|
|
|
|
|
||
Share-based payment awards |
|
|
1,307 |
|
|
|
0.9 |
|
Limitation on officer's compensation |
|
|
692 |
|
|
|
0.5 |
|
Non-deductible meals & entertainment |
|
|
1,930 |
|
|
|
1.3 |
|
Change in unrecognized tax benefits |
|
|
28 |
|
|
|
0.0 |
|
Other, net |
|
|
(276 |
) |
|
|
(0.1 |
) |
Effective tax rate |
|
|
44,991 |
|
|
|
29.3 |
% |
The reconciliations to statutory rates for periods prior to the adoption of ASU 2023-09 is as follows:
|
|
2024 |
|
|
2023 |
|
||
Statutory rate |
|
|
21.0 |
% |
|
|
21.0 |
% |
State income taxes, net of federal benefit |
|
|
5.5 |
|
|
|
4.8 |
|
Non-deductible compensation under Internal Revenue Code Section 162(m) |
|
|
1.1 |
|
|
|
3.4 |
|
Non-deductible meals & entertainment |
|
|
2.1 |
|
|
|
1.2 |
|
Change in valuation allowances |
|
|
3.0 |
|
|
|
1.0 |
|
Deduction relating to excess stock-based compensation |
|
|
0.6 |
|
|
|
0.1 |
|
Other |
|
|
(1.4 |
) |
|
|
(1.1 |
) |
|
|
|
31.9 |
% |
|
|
30.4 |
% |
Significant components of the Company’s deferred tax assets and liabilities were as follows at:
|
|
December 27, |
|
|
December 28, |
|
||
|
|
(in thousands) |
|
|||||
Deferred tax assets: |
|
|
|
|
|
|
||
Lease liabilities |
|
$ |
9,656 |
|
|
$ |
9,669 |
|
Inventory reserves |
|
|
5,555 |
|
|
|
8,282 |
|
Stock-based compensation expense |
|
|
10,819 |
|
|
|
9,415 |
|
Loss carryforwards |
|
|
4,107 |
|
|
|
2,874 |
|
Accrued expenses |
|
|
2,849 |
|
|
|
3,714 |
|
Accrued commitments for inventory at vendor locations |
|
|
283 |
|
|
|
458 |
|
Tax credit carryforwards |
|
|
194 |
|
|
|
342 |
|
Capitalized research and development |
|
|
125 |
|
|
|
3,598 |
|
Intangible assets amortization |
|
|
— |
|
|
|
433 |
|
Other |
|
|
1,003 |
|
|
|
1,252 |
|
Total deferred tax assets |
|
|
34,591 |
|
|
|
40,037 |
|
Valuation allowances |
|
|
(9,926 |
) |
|
|
(8,203 |
) |
Total deferred tax assets, net of valuation allowance |
|
|
24,665 |
|
|
|
31,834 |
|
Deferred tax liabilities: |
|
|
|
|
|
|
||
Property, plant, and equipment |
|
|
(76,201 |
) |
|
|
(84,081 |
) |
Right-of-use assets |
|
|
(7,759 |
) |
|
|
(7,643 |
) |
Intangible assets amortization |
|
|
(1,279 |
) |
|
|
— |
|
Prepaid expenses |
|
|
(4,211 |
) |
|
|
(5,913 |
) |
Total deferred tax liabilities |
|
|
(89,450 |
) |
|
|
(97,637 |
) |
Net deferred tax liabilities |
|
$ |
(64,785 |
) |
|
$ |
(65,803 |
) |
The Company’s policy is to classify interest and penalties related to income tax matters in income tax expense. Interest and penalties included in the provision for income taxes amounted to $0.0 million in fiscal year 2025, $(0.2) million in fiscal year 2024, and $0.1 in fiscal year 2023. Accrued interest and penalties amounted to $0.1 million at December 27, 2025 and $0.1 million at December 28, 2024.
A reconciliation of the beginning and ending amount of unrecognized tax benefits for fiscal 2025 and 2024 was as follows:
|
|
2025 |
|
|
2024 |
|
||
|
|
(in thousands) |
|
|||||
Balance at beginning of period |
|
$ |
480 |
|
|
$ |
303 |
|
Increases related to current period tax positions |
|
|
60 |
|
|
|
33 |
|
Increases related to prior period tax positions |
|
|
22 |
|
|
|
309 |
|
Decreases related to lapse of statute of limitations |
|
|
(47 |
) |
|
|
(165 |
) |
Balance at end of period |
|
$ |
515 |
|
|
$ |
480 |
|
Included in the balance of unrecognized tax benefits at December 27, 2025 and December 28, 2024 are potential net benefits of $0.5 million and $0.5 million, respectively, that would favorably impact the effective tax rate if recognized. Unrecognized tax benefits are included in accrued expenses in the accompanying consolidated balance sheets and adjusted in the period in which new information about a tax position becomes available or the final outcome differs from the amount recorded.
As of December 27, 2025, the Company’s 2022, 2023, and 2024 federal income tax returns remain subject to examination by the IRS. The Company’s state income tax returns remain subject to examination for or four years depending on the state’s statute of limitations. In addition, the Company is generally obligated to report changes in taxable income arising from federal income tax audits. The Company is currently under one income tax audit as of December 27, 2025.
As of December 27, 2025, the Company had Canadian non-capital loss carryforwards totaling $15.5 million, compared to $10.8 million as of December 28, 2024. These loss carryforwards will expire in various years from 2042 to 2046. The Company maintains a valuation allowance against these losses due to insufficient positive evidence to support their realization.
As of December 27, 2025, the Company’s deferred tax assets include a valuation allowance of $9.9 million, compared to $8.2 million at December 28, 2024. In evaluating the realizability of deferred tax assets, the Company considers all available evidence, both positive and negative. This assessment includes historical operating results, expectations of future market growth, forecasted earnings, future taxable income, and feasible tax planning strategies. The valuation allowance as of December 27, 2025 and December 28, 2024 was primarily related to stock-based compensation expected by management to be non-deductible under Internal Revenue Code, Section 162(m), as well as jurisdictional losses not expected to be utilized before expiring. The net increase in total valuation allowance was $1.7 million from December 28, 2024 to December 27, 2025, compared to a net increase of $2.4 million from December 30, 2023 to December 28, 2024 and a net increase of $1.2 million from December 31, 2022 to December 30, 2023.
During the period ended December 27, 2025, income taxes paid (net of refunds) in any state or foreign jurisdiction did not exceed 5 percent of total income taxes paid (net of refunds).
|
|
2025 |
|
|
|
|
(in thousands) |
|
|
Federal |
|
$ |
49,000 |
|
State |
|
|
13,920 |
|
Foreign Canada |
|
|
504 |
|
Total income tax payments, net |
|
|
63,424 |
|
The amount of cash income taxes paid by the Company (net of refunds) was $52 million for the year ended December 28, 2024, and $35.7 million for the year ended December 30, 2023.
The Company's primary business operations are within the United States. During the period ended December 27, 2025, the Company had 12 state and local jurisdictions that made up the majority (greater than 50 percent) of the state income tax category disclosed above in the "Significant components of the income tax provision" section of this footnote. Those state and local jurisdictions are listed in alphabetical order as follows: California, Cincinnati, Florida, Illinois, Massachusetts, Michigan, New Jersey, New York City, Oregon, Pennsylvania, Tennessee, and Texas.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 24, 2026 | Showing above |
| 2024 | Feb 25, 2025 | |
| 2023 | Feb 27, 2024 | |
| 2022 | Feb 22, 2023 | |
| 2021 | Feb 22, 2022 | |
| 2020 | Feb 17, 2021 | |
| 2019 | Feb 19, 2020 | |
| 2018 | Feb 20, 2019 | |
| 2017 | Feb 21, 2018 | |
| 2016 | Feb 22, 2017 | |
| 2015 | Feb 18, 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.