TrueBlue, Inc.TBI
TrueBlue, Inc. Income Taxes Disclosure
INCOME TAXES
U.S. and foreign components of loss before tax expense (benefit) was as follows:
| (in thousands) | 2025 | 2024 | 2023 | ||||||||
| U.S. | $ | (51,101) | $ | (97,733) | $ | (27,773) | |||||
| Foreign | 5,470 | 9,209 | 7,128 | ||||||||
Loss before tax expense (benefit) | $ | (45,631) | $ | (88,524) | $ | (20,645) | |||||
The provision for income taxes is comprised of the following:
| (in thousands) | 2025 | 2024 | 2023 | ||||||||
| Current taxes: | |||||||||||
| Federal | $ | (87) | $ | 150 | $ | 329 | |||||
| State | 550 | 1,241 | 582 | ||||||||
| Foreign | 2,515 | 1,771 | 2,817 | ||||||||
| Total current taxes | 2,978 | 3,162 | 3,728 | ||||||||
| Deferred taxes: | |||||||||||
| Federal | 35 | 28,484 | (8,109) | ||||||||
| State | (172) | 5,295 | (1,383) | ||||||||
| Foreign | (512) | 283 | (708) | ||||||||
| Total deferred taxes | (649) | 34,062 | (10,200) | ||||||||
Income tax expense (benefit): | |||||||||||
| Federal | (52) | 28,634 | (7,780) | ||||||||
| State | 378 | 6,536 | (801) | ||||||||
| Foreign | 2,003 | 2,054 | 2,109 | ||||||||
Total income tax expense (benefit) | $ | 2,329 | $ | 37,224 | $ | (6,472) | |||||
Our tax provision and our effective tax rate are subject to variation due to several factors, including variability in our pre-tax and taxable income or loss by jurisdiction, tax credits, government audit developments, changes in laws, regulations and administrative practices, valuation allowances recorded on deferred tax assets, and relative changes in expenses or losses for which tax benefits are not recognized. Additionally, our effective tax rate can be more or less volatile based on the amount of pre-tax income or loss. For example, the impact of discrete items, tax credits, non-deductible expenses and valuation allowance on our effective tax rate can be greater when our pre-tax income or loss is lower.
The items accounting for the difference between income taxes computed at the statutory federal income tax rate and income taxes reported on the Consolidated Statements of Operations and Comprehensive Income (Loss) are as follows:
| (in thousands, except percentages) | 2025 | % | 2024 | % | 2023 | % | ||||||||||||||
Income tax expense (benefit) based on U.S. federal statutory rate | $ | (9,583) | 21.0 | % | $ | (18,590) | 21.0 | % | $ | (4,335) | 21.0 | % | ||||||||
| Increase (decrease) resulting from: | ||||||||||||||||||||
State and local tax effects | ||||||||||||||||||||
| State and local income taxes, net of federal income tax effect (1) | 550 | (1.2) | 1,341 | (1.5) | (1,258) | 6.1 | ||||||||||||||
| Foreign tax effects | ||||||||||||||||||||
| Canada | ||||||||||||||||||||
| Foreign withholdings | 81 | (0.2) | 87 | (0.1) | 257 | (1.2) | ||||||||||||||
| Other | 155 | (0.3) | (200) | 0.2 | (71) | 0.4 | ||||||||||||||
| India | ||||||||||||||||||||
| Statutory tax rate difference between India and U.S. | 356 | (0.8) | 384 | (0.4) | 579 | (2.8) | ||||||||||||||
| India tax holiday | (324) | 0.7 | (406) | 0.5 | (423) | 2.0 | ||||||||||||||
| Other | 123 | (0.3) | 1 | — | 4 | — | ||||||||||||||
| Other foreign jurisdictions | 463 | (0.9) | 254 | (0.2) | 249 | (1.2) | ||||||||||||||
Tax credits | ||||||||||||||||||||
| Hiring tax credits | (2,700) | 5.9 | (5,376) | 6.1 | (6,325) | 30.6 | ||||||||||||||
| Foreign tax credits | (478) | 1.0 | — | — | — | — | ||||||||||||||
| Change in valuation allowance | 12,704 | (27.8) | 57,626 | (65.1) | (58) | 0.3 | ||||||||||||||
| Nontaxable or non-deductible items | ||||||||||||||||||||
| Executive compensation | 206 | (0.5) | 865 | (1.0) | 2,036 | (9.9) | ||||||||||||||
| Goodwill and intangible asset impairment charge | — | — | — | — | 2,287 | (11.1) | ||||||||||||||
| Wages on hiring tax credits | 567 | (1.2) | 1,129 | (1.3) | 1,328 | (6.4) | ||||||||||||||
| Company-owned life insurance | (1,035) | 2.3 | (1,037) | 1.2 | (1,205) | 5.8 | ||||||||||||||
| Meals & entertainment | 131 | (0.3) | 133 | (0.2) | 219 | (1.1) | ||||||||||||||
| Stock-based compensation | 1,038 | (2.3) | 899 | (1.0) | 724 | (3.5) | ||||||||||||||
| Other | 109 | (0.3) | 95 | (0.1) | 97 | (0.5) | ||||||||||||||
| Change in unrecognized tax benefits | (136) | 0.3 | (99) | 0.1 | (206) | 1.0 | ||||||||||||||
| Other adjustments | 102 | (0.2) | 118 | (0.2) | (371) | 1.8 | ||||||||||||||
Total income tax expense (benefit) and effective tax rate | $ | 2,329 | (5.1) | % | $ | 37,224 | (42.0) | % | $ | (6,472) | 31.3 | % | ||||||||
(1)State taxes in the following states make up the majority (greater than 50%) of the tax expense (benefit) for the years presented:
a.2025 - Georgia, Maryland, Oregon, Tennessee and Texas
b.2024 - Georgia, Maryland, Oregon, Tennessee and Texas
c.2023 - California, Georgia, Indiana, Louisiana, Maryland, Mississippi, New York, Pennsylvania, South Carolina, Tennessee and Texas
Our effective tax rate for fiscal 2025 was (5.1)%. The difference between the statutory federal income tax rate of 21.0% and our effective income tax rate was primarily due to the valuation allowance against our U.S. federal and state and certain foreign deferred tax assets.
Of the total goodwill and intangible asset impairment charge of $9.5 million recorded during fiscal 2023, $8.9 million (tax effect of $2.3 million) related to goodwill from a stock acquisition, and accordingly was not deductible for tax purposes.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. We have completed our evaluation of the impact of the OBBBA on our financial statements and the impact was immaterial.
The Organization for Economic Co-operation and Development (the ”OECD”) has introduced a framework to implement a global minimum corporate tax of 15%, referred to as “Pillar Two.” In January 2026, the OECD issued additional guidance, including a safe harbor framework for certain U.S.-parented groups. We have determined that “Pillar Two” did not have a material impact on our financial statements.
The federal Work Opportunity Tax Credit (“WOTC”), our primary hiring tax credit, is designed to encourage employers to hire workers from certain targeted groups with higher than average unemployment rates. WOTC is generally calculated as a percentage of wages over a twelve-month period up to worker maximums by targeted groups. Based on historical results and business trends, we estimate the amount of WOTC we expect to earn related to wages of the current year. However, the estimate is subject to variation because 1) a small percentage of our workers qualify for one or more of the many targeted groups; 2) the targeted groups are subject to different incentive credit rates and limitations; 3) credits fluctuate depending on economic conditions and qualified worker retention periods; and 4) state and federal offices can delay their credit certification processing and have inconsistent certification rates. We recognize an adjustment to prior year hiring tax credits if credits certified by government offices differ from original estimates. The U.S. Congress has approved the WOTC program through the end of 2025.
The components of deferred tax assets and liabilities were as follows:
| (in thousands) | December 28, 2025 | December 29, 2024 | ||||||
| Deferred tax assets: | ||||||||
| Allowance for credit losses | $ | 573 | $ | 264 | ||||
| Accounts payable and other accrued expenses | 3,731 | 8,630 | ||||||
| Net operating loss carryforwards | 29,490 | 17,971 | ||||||
| Tax credit carryforwards | 24,832 | 21,478 | ||||||
| Accrued wages and benefits | 6,117 | 5,702 | ||||||
| Deferred compensation | 11,719 | 11,411 | ||||||
| Lease liabilities | 14,207 | 15,242 | ||||||
| Other | 515 | 504 | ||||||
| Total | 91,184 | 81,202 | ||||||
| Valuation allowance | (80,316) | (64,488) | ||||||
| Total deferred tax asset, net of valuation allowance | 10,868 | 16,714 | ||||||
| Deferred tax liabilities: | ||||||||
| Prepaid expenses, deposits and other current assets | (820) | (526) | ||||||
| Lease right-of-use assets | (8,056) | (12,295) | ||||||
| Depreciation and amortization | (49) | (2,853) | ||||||
| Workers’ compensation | (934) | (503) | ||||||
| Total deferred tax liabilities | (9,859) | (16,177) | ||||||
| Deferred income taxes, net | $ | 1,009 | $ | 537 | ||||
Since deferred tax assets and liabilities attributable to different jurisdictions cannot be offset, deferred tax liabilities of $0.3 million and $0.3 million were included in other long-term liabilities on our Consolidated Balance Sheets as of December 28, 2025 and December 29, 2024, respectively.
Our valuation allowance relates to certain deferred tax balances that we expect will not be utilized within the permitted carryforward periods as of December 28, 2025 and December 29, 2024. Based on our deferred tax asset realizability assessments performed during the fiscal year ended December 28, 2025, we maintained a valuation allowance against U.S. federal, state and certain foreign deferred tax assets. Our conclusion was driven by U.S. and certain foreign pre-tax losses beginning in 2023 and continuing into 2025, combined with the non-cash goodwill impairment charge of $59.1 million recorded during the fiscal year ended December 29, 2024. Changes to deferred taxes related to foreign currency translation were immaterial for fiscal 2025, 2024 and 2023.
The following table summarizes our credit carryforwards and net operating losses (“NOLs”) along with their respective valuation allowance as of December 28, 2025:
| (in thousands) | Carryover tax benefit | Valuation allowance | Expected benefit | Year expiration begins | ||||||||||
| Year-end tax attributes: | ||||||||||||||
| Federal WOTCs | $ | 24,355 | $ | (24,355) | $ | — | 2042 | |||||||
| Federal NOLs | 22,034 | (22,034) | — | Indefinite | ||||||||||
| State NOLs | 7,343 | (7,343) | — | Various | ||||||||||
| Foreign Tax Credits | 478 | (478) | — | 2031 | ||||||||||
| Foreign NOLs | 112 | (112) | — | Indefinite | ||||||||||
| Foreign alternative minimum tax credits | 305 | — | 305 | 2034 | ||||||||||
| Total | $ | 54,627 | $ | (54,322) | $ | 305 | ||||||||
The activity related to the income tax valuation allowance was as follows:
| (in thousands) | 2025 | 2024 | 2023 | ||||||||
| Beginning balance | $ | 64,488 | $ | 834 | $ | 2,152 | |||||
| Charged to expense | 15,912 | 63,654 | (58) | ||||||||
| Release of allowance | — | — | (1,260) | ||||||||
Other | (84) | — | — | ||||||||
| Ending balance | $ | 80,316 | $ | 64,488 | $ | 834 | |||||
As of December 28, 2025, our liability for unrecognized tax benefits was $0.3 million. If recognized, $0.2 million could impact our effective tax rate. In general, the tax years 2022 through 2024 remain open to examination by the major taxing jurisdictions where we conduct business. Interest and penalties accrued related to unrecognized tax benefits were immaterial as of December 28, 2025.
Income taxes paid, net of refunds received, disaggregated by jurisdiction were as follows:
(in thousands) | 2025 | 2024 | 2023 | ||||||||
Federal | $ | (6,617) | $ | (25) | $ | — | |||||
State | (204) | 139 | 1,181 | ||||||||
Foreign | 1,974 | 97 | 3,990 | ||||||||
Total taxes paid, net of refunds received | $ | (4,847) | $ | 211 | $ | 5,171 | |||||
Income taxes paid, net of refunds received, exceeded 5% of total income taxes paid, net of refunds received, for the following individual jurisdictions:
(in thousands) | 2025 | 2024 | 2023 | ||||||||
State | |||||||||||
| California | $ | (574) | $ | (287) | $ | 328 | |||||
Foreign | |||||||||||
| Canada | * | $ | (561) | $ | 1,376 | ||||||
| India | $ | 361 | $ | (946) | $ | 1,074 | |||||
| United Kingdom | $ | 1,275 | $ | 1,736 | $ | 1,561 | |||||
| Australia | * | $ | (653) | * | |||||||
| Netherlands | * | $ | 306 | * | |||||||
*Indicates the jurisdiction is immaterial for the period presented.
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 18, 2026 | Showing above |
| 2024 | Feb 19, 2025 | |
| 2023 | Feb 21, 2024 | |
| 2022 | Feb 15, 2023 | |
| 2021 | Feb 16, 2022 | |
| 2020 | Feb 22, 2021 | |
| 2019 | Feb 24, 2020 | |
| 2018 | Feb 22, 2019 | |
| 2017 | Feb 24, 2017 | |
| 2015 | Feb 22, 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.