Snowflake Inc.SNOW
Snowflake Inc. Income Taxes Disclosure
Income Taxes
The components of loss before income taxes were as follows (in thousands):
| Fiscal Year Ended January 31, | |||||||||||||||||
| 2026 | 2025 | 2024 | |||||||||||||||
| U.S. | $ | (1,377,141) | $ | (1,341,798) | $ | (875,703) | |||||||||||
| Foreign | 65,231 | 56,699 | 26,480 | ||||||||||||||
| Loss before income taxes | $ | (1,311,910) | $ | (1,285,099) | $ | (849,223) | |||||||||||
The provision for (benefit from) income taxes consists of the following (in thousands):
| Fiscal Year Ended January 31, | |||||||||||||||||
| 2026 | 2025 | 2024 | |||||||||||||||
| Current provision: | |||||||||||||||||
| State | $ | 285 | $ | 806 | $ | 754 | |||||||||||
| Foreign | 19,177 | 10,978 | 14,775 | ||||||||||||||
| Deferred benefit: | |||||||||||||||||
| Federal | (5,392) | (6,294) | (15,376) | ||||||||||||||
| State | (1,130) | (1,011) | (4,700) | ||||||||||||||
| Foreign | 4,185 | (366) | (6,686) | ||||||||||||||
Provision for (benefit from) income taxes | $ | 17,125 | $ | 4,113 | $ | (11,233) | |||||||||||
The following table presents the required disclosure pursuant to ASU 2023-09 and reconciles the federal statutory tax amount and rate to the Company’s actual global effective tax amount and rate for the fiscal year ended January 31, 2026:
| Fiscal Year Ended January 31, 2026 | |||||||||||
Amount (in thousands) | Percent | ||||||||||
Federal statutory tax rate | $ | (275,501) | 21.0 | % | |||||||
State and local income taxes, net of federal income tax effect(1) | (11,049) | 0.8 | |||||||||
Foreign tax effects | 6,016 | (0.4) | |||||||||
Effect of cross-border tax laws | (12,112) | 0.9 | |||||||||
Tax credits: | |||||||||||
Research and development tax credits | (122,741) | 9.4 | |||||||||
Change in valuation allowances | 490,646 | (37.4) | |||||||||
Nontaxable or nondeductible items: | |||||||||||
Section 162(m) - limitation on executive compensation | 25,271 | (1.9) | |||||||||
Stock-based compensation | (128,731) | 9.8 | |||||||||
Other | 6,032 | (0.5) | |||||||||
Worldwide changes in unrecognized tax benefits | 39,294 | (3.0) | |||||||||
Provision for income taxes | $ | 17,125 | (1.3%) | ||||||||
________________
(1)State and local income tax benefits, net of federal income tax effect, was primarily attributable to California, which made up the majority (greater than 50 percent) of the tax effect in this category.
The following table presents the required disclosures prior to the adoption of ASU 2023-09 and reconciles the federal statutory income tax amount to the Company’s actual global effective tax amount for the fiscal years ended January 2025 and 2024 (in thousands):
| Fiscal Year Ended January 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Income tax benefit computed at federal statutory rate | $ | (269,871) | $ | (178,337) | |||||||
| State taxes, net of federal benefit | 33,910 | 26,380 | |||||||||
| Research and development credits | (133,266) | (101,725) | |||||||||
| Stock-based compensation | (7,667) | (148,600) | |||||||||
| Change in valuation allowance | 363,422 | 371,767 | |||||||||
| IRC Section 59A waived deductions | — | 11,550 | |||||||||
| Other | 17,585 | 7,732 | |||||||||
| Provision for (benefit from) income taxes | $ | 4,113 | $ | (11,233) | |||||||
The following table presents the required disclosure pursuant to ASU 2023-09 regarding the amount of income taxes paid, net of refunds received (in thousands):
| Fiscal Year Ended January 31, 2026 | |||||
Federal | $ | — | |||
State | 533 | ||||
Foreign: | |||||
| Netherlands | 3,449 | ||||
India | 2,665 | ||||
| France | 1,062 | ||||
Germany | 942 | ||||
| Other Foreign | 4,668 | ||||
Total cash paid for income taxes, net of refunds received | $ | 13,319 | |||
For the fiscal years ended January 31, 2025 and 2024, cash paid for income taxes, net of refunds received, was $15.7 million and $12.5 million, respectively.
A valuation allowance has been recognized to offset the Company’s deferred tax assets, as necessary, by the amount of any tax benefits that, based on evidence, are not expected to be realized. As of January 31, 2026, 2025 and 2024, the Company believes it is more likely than not that its U.S. and U.K. deferred tax assets will not be fully realizable and continues to maintain a full valuation allowance against these net deferred tax assets.
Significant components of the Company’s deferred tax assets and deferred tax liabilities are shown below (in thousands):
| January 31, 2026 | January 31, 2025 | ||||||||||
| Deferred tax assets: | |||||||||||
| Net operating losses carryforwards | $ | 1,967,803 | $ | 1,707,649 | |||||||
| Capitalized research and development | 913,392 | 725,823 | |||||||||
| Tax credit carryforwards | 648,589 | 511,504 | |||||||||
| Operating lease liabilities | 113,268 | 104,517 | |||||||||
| Deferred revenue | 67,582 | 95,779 | |||||||||
| Stock-based compensation | 40,935 | 36,044 | |||||||||
Capped call transactions | 32,288 | 45,032 | |||||||||
| Net unrealized losses on strategic investments | 21,850 | 6,143 | |||||||||
| Other | 84,115 | 50,790 | |||||||||
| Total deferred tax assets | 3,889,822 | 3,283,281 | |||||||||
| Less: valuation allowance | (3,696,149) | (3,104,505) | |||||||||
| Net deferred tax assets | 193,673 | 178,776 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Intangible assets | (19,021) | (27,481) | |||||||||
| Operating lease right-of-use assets | (72,684) | (94,997) | |||||||||
| Deferred commissions | (103,104) | (56,662) | |||||||||
| Other | (3,286) | (234) | |||||||||
| Total deferred tax liabilities | (198,095) | (179,374) | |||||||||
Net deferred tax liabilities | $ | (4,422) | $ | (598) | |||||||
The valuation allowance was $3.7 billion and $3.1 billion as of January 31, 2026 and 2025, respectively, primarily relating to U.S. federal and state net operating loss carryforwards, capitalized research and development, and tax credit carryforwards. The valuation allowance increased $591.6 million and $520.4 million during the fiscal years ended January 31, 2026 and January 31, 2024, respectively, primarily due to increased U.S. federal and state net operating loss carryforwards, capitalized research and development, and tax credit carryforwards. The valuation allowance increased $483.5 million during the fiscal year ended January 31, 2025, primarily due to increased capitalized research and development and tax credit carryforwards.
As of January 31, 2026, the Company had U.S. federal, state, and foreign net operating loss carryforwards of $7.3 billion, $6.5 billion, and $174.5 million, respectively. Of the $7.3 billion U.S. federal net operating loss carryforwards, $7.2 billion may be carried forward indefinitely with utilization limited to 80% of taxable income, and the remaining $0.1 billion will begin to expire in 2032. The state net operating loss carryforwards begin to expire in 2027. The foreign net operating loss carryforwards may be carried forward indefinitely. As of January 31, 2026, the Company also had federal and state tax credits of $605.6 million and $275.5 million, respectively. The federal tax credit carryforwards will expire beginning in 2032 if not utilized. The state tax credit carryforwards do not expire. Utilization of the Company’s net operating loss and tax credit carryforwards may be subject to annual limitation due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. Such an annual limitation could result in the expiration of the net operating loss and tax credit carryforwards before utilization.
Foreign withholding taxes have not been provided for the cumulative undistributed earnings of the Company’s foreign subsidiaries as of January 31, 2026 due to the Company’s intention to permanently reinvest such earnings. Determination of the amount of unrecognized deferred tax liability related to these earnings is not practicable.
The following table shows the changes in the gross amount of unrecognized tax benefits (in thousands):
| Fiscal Year Ended January 31, | |||||||||||||||||
| 2026 | 2025 | 2024 | |||||||||||||||
| Beginning balance | $ | 151,660 | $ | 115,253 | $ | 75,180 | |||||||||||
Increases based on tax positions during the prior period | 3,689 | 655 | 12,708 | ||||||||||||||
Increases based on tax positions during the current period | 37,778 | 35,752 | 27,365 | ||||||||||||||
Foreign currency translation adjustments | (193) | — | — | ||||||||||||||
| Ending balance | $ | 192,934 | $ | 151,660 | $ | 115,253 | |||||||||||
The Company files income tax returns in the U.S. federal jurisdiction, various state jurisdictions, and in various international jurisdictions. Tax years 2012 and forward generally remain open for examination for federal and state tax purposes. Tax years 2020 and forward generally remain open for examination for foreign tax purposes. To the extent utilized in future years’ tax returns, net operating loss carryforwards at January 31, 2026 and 2025 will remain subject to examination until the respective tax year is closed.
On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (Inflation Act) into law. The Inflation Act contains certain tax measures, including a corporate alternative minimum tax of 15% on some large corporations and an excise tax of 1% on stock repurchases. For the fiscal year ended January 31, 2026, the Inflation Act had no material impact to the Company, including its stock repurchase program.
On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was enacted in the United States. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions including the immediate expensing of the United States research and development expenditures. For the fiscal year ended January 31, 2026, the OBBBA had no material impact on the Company’s consolidated financial statements.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | Mar 20, 2026 | Showing above |
| 2025 | Mar 21, 2025 | |
| 2024 | Mar 26, 2024 | |
| 2023 | Mar 29, 2023 | |
| 2022 | Mar 30, 2022 | |
| 2021 | Mar 31, 2021 | |
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.