J M SMUCKER CoSJM
J M SMUCKER Co Income Taxes Disclosure
Note 14: Income Taxes
The following table sets forth our income (loss) before income taxes.
| Year Ended April 30, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Domestic | $ | (1,087.6) | $ | 975.8 | $ | (23.6) | |||||||||||
| Foreign | 40.8 | 20.6 | 14.4 | ||||||||||||||
| Income (loss) before income taxes | $ | (1,046.8) | $ | 996.4 | $ | (9.2) | |||||||||||
The following table summarizes the components of the provision for income taxes.
| Year Ended April 30, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 228.0 | $ | 234.1 | $ | 217.9 | |||||||||||
| Foreign | 11.7 | 10.1 | 5.4 | ||||||||||||||
| State and local | 52.3 | 48.7 | 49.5 | ||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | (45.4) | (35.7) | (158.5) | ||||||||||||||
| Foreign | (0.5) | (2.3) | (1.0) | ||||||||||||||
| State and local | (62.1) | (2.5) | (31.2) | ||||||||||||||
| Total income tax expense | $ | 184.0 | $ | 252.4 | $ | 82.1 | |||||||||||
The income tax expense of $184.0 for 2025 includes unfavorable permanent impacts associated with the goodwill impairment charges for the Sweet Baked Snacks reporting unit and the sale of the Voortman business, partially offset by the favorable noncash deferred tax benefits associated with the integration of Hostess Brands into our Company and certain state legislative changes enacted during the year. The income tax expense of $252.4 for 2024 includes unfavorable permanent and deferred tax impacts associated with the acquisition of Hostess Brands. The income tax expense of $82.1 for 2023 includes unfavorable permanent tax impacts associated with the sale of certain pet food brands.
The following table sets forth a reconciliation of the statutory federal income tax rate and the effective income tax rate.
| Year Ended April 30, | |||||||||||||||||
| (Percent of pre-tax income or loss) | 2025 | 2024 | 2023 | ||||||||||||||
| Statutory federal income tax rate | 21.0 | % | 21.0 | % | 21.0 | % | |||||||||||
| Acquisition of Hostess Brands | — | 1.3 | — | ||||||||||||||
Deferred tax benefit from Hostess integration | 1.8 | — | — | ||||||||||||||
| Sale of certain pet food brands | — | — | (776.4) | ||||||||||||||
Sale of Voortman business | (6.6) | — | — | ||||||||||||||
| State and local income taxes | 4.2 | 2.9 | (157.7) | ||||||||||||||
| Deferred tax benefit from state legislative changes | 1.9 | — | — | ||||||||||||||
| Goodwill impairment charges | (39.2) | — | — | ||||||||||||||
| Other items – net | (0.7) | 0.1 | 20.7 | ||||||||||||||
| Effective income tax rate | (17.6) | % | 25.3 | % | (892.4) | % | |||||||||||
| Income taxes paid | $ | 332.1 | $ | 316.5 | $ | 254.8 | |||||||||||
We are a voluntary participant in the Compliance Assurance Process (“CAP”) program offered by the IRS and are currently under a CAP examination for the tax years ended April 30, 2025, and April 30, 2026. During 2025, the IRS concluded the CAP examinations for the 2023 and 2024 tax years. The fiscal years prior to 2022 are no longer subject to U.S. federal tax examination under the statute of limitations. With limited exceptions, we are no longer subject to examination for state, local, and foreign jurisdictions for the tax years prior to 2021.
Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting. The following table summarizes significant components of our deferred tax assets and liabilities.
| April 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax liabilities: | |||||||||||
| Intangible assets | $ | 1,454.4 | $ | 1,683.9 | |||||||
| Property, plant, and equipment | 275.5 | 276.9 | |||||||||
| Leases | 24.3 | 33.8 | |||||||||
| Other | 25.9 | 22.6 | |||||||||
| Total deferred tax liabilities | $ | 1,780.1 | $ | 2,017.2 | |||||||
| Deferred tax assets: | |||||||||||
| Post-employment and other employee benefits | $ | 62.1 | $ | 69.1 | |||||||
| Tax credit and loss carryforwards | 35.5 | 27.7 | |||||||||
| Intangible assets | 34.4 | 40.7 | |||||||||
| Hedging transactions | 11.6 | 49.9 | |||||||||
| Leases | 26.0 | 36.3 | |||||||||
| Other | 95.5 | 82.3 | |||||||||
| Total deferred tax assets | $ | 265.1 | $ | 306.0 | |||||||
| Valuation allowance | (33.6) | (26.2) | |||||||||
| Total deferred tax assets, less allowance | $ | 231.5 | $ | 279.8 | |||||||
| Net deferred tax liability | $ | 1,548.6 | $ | 1,737.4 | |||||||
We evaluate the realizability of deferred tax assets for each of the jurisdictions in which we operate. The total valuation allowance increased by $7.4 during the year, primarily as a result of the sale of the Voortman business.
As of April 30, 2025, we have determined that a portion of our undistributed earnings, in Canada, is not permanently reinvested, resulting in the recognition of an immaterial deferred tax liability. Deferred income taxes have not been provided on approximately $18.1 of the unremitted earnings of our foreign subsidiaries, primarily Canada, that are determined to be permanently reinvested, the tax effects of which are immaterial.
Our unrecognized tax benefits were $2.5, $4.6, and $5.3, of which $2.0, $3.7, and $4.2 would affect the effective income tax rate, if recognized, as of April 30, 2025, 2024, and 2023, respectively.
Within the next 12 months, it is reasonably possible that we could decrease our unrecognized tax benefits by an estimated $1.1, primarily as a result of the expiration of statute of limitation periods.
The following table sets forth a reconciliation of our unrecognized tax benefits.
| 2025 | 2024 | 2023 | |||||||||||||||
| Balance at May 1, | $ | 4.6 | $ | 5.3 | $ | 6.5 | |||||||||||
| Increases: | |||||||||||||||||
| Acquired business | — | 1.3 | — | ||||||||||||||
| Decreases: | |||||||||||||||||
| Expiration of statute of limitations periods | 1.3 | 2.0 | 1.2 | ||||||||||||||
| Disposed business | 0.8 | — | — | ||||||||||||||
| Balance at April 30, | $ | 2.5 | $ | 4.6 | $ | 5.3 | |||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Jun 18, 2025 | Showing above |
| 2024 | Jun 18, 2024 | |
| 2023 | Jun 20, 2023 | |
| 2022 | Jun 16, 2022 | |
| 2021 | Jun 17, 2021 | |
| 2020 | Jun 19, 2020 | |
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.