STARBUCKS CORPSBUX
STARBUCKS CORP Income Taxes Disclosure
Income Taxes
Components of earnings before income taxes (in millions):
| Fiscal Year Ended | Sep 28, 2025 | Sep 29, 2024 | Oct 1, 2023 | ||||||||||||||
| United States | $ | 1,850.1 | $ | 4,087.6 | $ | 4,488.6 | |||||||||||
| Foreign | 657.2 | 882.0 | 913.3 | ||||||||||||||
| Total earnings before income taxes | $ | 2,507.3 | $ | 4,969.6 | $ | 5,401.9 | |||||||||||
Provision/(benefit) for income taxes (in millions):
| Fiscal Year Ended | Sep 28, 2025 | Sep 29, 2024 | Oct 1, 2023 | ||||||||||||||
| Current taxes: | |||||||||||||||||
| U.S. federal | $ | 179.4 | $ | 681.2 | $ | 678.2 | |||||||||||
| U.S. state and local | 120.4 | 210.9 | 235.9 | ||||||||||||||
| Foreign | 362.5 | 328.8 | 422.4 | ||||||||||||||
| Total current taxes | 662.3 | 1,220.9 | 1,336.5 | ||||||||||||||
| Deferred taxes: | |||||||||||||||||
| U.S. federal | 30.2 | 10.7 | 117.0 | ||||||||||||||
| U.S. state and local | (11.3) | (0.7) | (0.8) | ||||||||||||||
| Foreign | (30.6) | (23.6) | (175.5) | ||||||||||||||
| Total deferred taxes | (11.7) | (13.6) | (59.3) | ||||||||||||||
| Total income tax expense | $ | 650.6 | $ | 1,207.3 | $ | 1,277.2 | |||||||||||
Reconciliation of the statutory U.S. federal income tax rate with our effective income tax rate:
| Fiscal Year Ended | Sep 28, 2025 | Sep 29, 2024 | Oct 1, 2023 | ||||||||||||||
| Statutory rate | 21.0 | % | 21.0 | % | 21.0 | % | |||||||||||
| State income taxes, net of federal tax benefit | 3.4 | 3.3 | 3.4 | ||||||||||||||
| Foreign rate differential | 0.3 | 0.3 | 0.4 | ||||||||||||||
| Residual tax on foreign earnings | 3.6 | 0.4 | — | ||||||||||||||
| Foreign derived intangible income | (1.6) | (0.8) | (0.8) | ||||||||||||||
Tax status change of foreign entity | (1.4) | — | — | ||||||||||||||
| Other, net | 0.6 | 0.1 | (0.4) | ||||||||||||||
| Effective tax rate | 25.9 | % | 24.3 | % | 23.6 | % | |||||||||||
During fiscal 2025, we revised our indefinite reinvestment assertions from prior years' cumulative earnings from certain foreign subsidiaries, and in the fourth quarter of fiscal 2025, we repatriated approximately $900 million of cash from foreign subsidiaries, upon which approximately $90 million in related withholding taxes were recorded and paid, as reflected in Residual tax on foreign earnings.
As of September 28, 2025, in certain foreign subsidiaries in which we are partially indefinitely reinvested, the gross taxable temporary difference between the accounting basis and tax basis was approximately $1.8 billion for which there could be up to approximately $180 million of unrecognized tax liability.
Tax effect of temporary differences and carryforwards that comprise significant portions of deferred tax assets and liabilities (in millions):
| Sep 28, 2025 | Sep 29, 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Operating lease liabilities | $ | 2,646.7 | $ | 2,595.1 | |||||||
| Stored value card liability and deferred revenue | 1,593.0 | 1,612.5 | |||||||||
| Intangible assets and goodwill | 355.5 | 372.6 | |||||||||
| Other | 780.9 | 692.2 | |||||||||
| Total | 5,376.1 | 5,272.4 | |||||||||
| Valuation allowance | (189.2) | (194.5) | |||||||||
| Total deferred tax asset, net of valuation allowance | 5,186.9 | 5,077.9 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Operating lease, right-of-use assets | (2,466.8) | (2,483.7) | |||||||||
| Property, plant and equipment | (641.3) | (580.8) | |||||||||
| Other | (302.3) | (267.8) | |||||||||
| Total | (3,410.4) | (3,332.3) | |||||||||
| Net deferred tax asset (liability) | $ | 1,776.5 | $ | 1,745.6 | |||||||
| Reported as: | |||||||||||
| Deferred income tax assets | $ | 1,826.9 | $ | 1,766.7 | |||||||
| Deferred income tax liabilities (included in Other long-term liabilities) | (50.4) | (21.1) | |||||||||
| Net deferred tax asset (liability) | $ | 1,776.5 | $ | 1,745.6 | |||||||
The valuation allowances as of September 28, 2025, and September 29, 2024, were primarily related to net operating losses and other deferred tax assets of consolidated foreign subsidiaries.
As of September 28, 2025, we had federal tax credit carryforwards of $68.5 million, which will begin to expire in fiscal 2030, and foreign net operating loss carryforwards of $444.8 million, of which $104.5 million have an indefinite carryforward period and the remainder will begin to expire in fiscal 2026.
Uncertain Tax Positions
As of September 28, 2025, we had $119.9 million of gross unrecognized tax benefits, of which $76.6 million, if recognized, would affect our effective tax rate. We recognized expense of $8.4 million, $8.8 million, and $5.7 million of interest and penalties in income tax expense, prior to the benefit of the federal tax deduction, for fiscal 2025, 2024, and 2023, respectively. As of September 28, 2025, and September 29, 2024, we had accrued interest and penalties of $30.4 million and $22.5 million, respectively, on our consolidated balance sheets.
The following table summarizes the activity related to our unrecognized tax benefits (in millions):
| Sep 28, 2025 | Sep 29, 2024 | Oct 1, 2023 | |||||||||||||||
| Beginning balance | $ | 108.0 | $ | 105.0 | $ | 89.7 | |||||||||||
| Increase related to prior year tax positions | 3.1 | 7.9 | 1.2 | ||||||||||||||
| Decrease related to prior year tax positions | (0.4) | (6.4) | (0.4) | ||||||||||||||
| Increase related to current year tax positions | 12.9 | 10.3 | 14.5 | ||||||||||||||
| Decreases related to settlements with taxing authorities | (0.7) | (8.8) | — | ||||||||||||||
| Decrease related to lapsing of statute of limitations | (3.0) | — | — | ||||||||||||||
| Ending balance | $ | 119.9 | $ | 108.0 | $ | 105.0 | |||||||||||
We are currently under examination, or may be subject to examination, by various U.S. federal, state, local, and foreign tax jurisdictions for fiscal 2018 through 2024. We are no longer subject to U.S. federal, U.S. state and local, or material foreign market examinations for years prior to fiscal 2018.
It is reasonably possible that up to approximately $62 million of the Company’s gross unrecognized tax benefits may be recognized by the end of fiscal 2026 for reasons such as a lapse of the statute of limitations or resolution of examinations with tax authorities.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Nov 14, 2025 | Showing above |
| 2024 | Nov 20, 2024 | |
| 2023 | Nov 17, 2023 | |
| 2022 | Nov 18, 2022 | |
| 2021 | Nov 19, 2021 | |
| 2020 | Nov 12, 2020 | |
| 2019 | Nov 15, 2019 | |
| 2018 | Nov 16, 2018 | |
| 2017 | Nov 17, 2017 | |
| 2016 | Nov 18, 2016 | |
| 2015 | Nov 12, 2015 | |
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.