TRACTOR SUPPLY CO /DE/TSCO
TRACTOR SUPPLY CO /DE/ Income Taxes Disclosure
Income Taxes
The provision for income taxes consists of the following (in thousands):
| Fiscal Year | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Current tax expense: | |||||||||||||||||
| Federal | $ | 212,791 | $ | 292,895 | $ | 270,024 | |||||||||||
| State | 28,100 | 39,133 | 45,093 | ||||||||||||||
| Total current tax expense | 240,891 | 332,028 | 315,117 | ||||||||||||||
Deferred tax expense (benefit): | |||||||||||||||||
| Federal | 45,000 | (14,264) | 12,000 | ||||||||||||||
| State | 16,267 | (6,064) | (1,941) | ||||||||||||||
| Total deferred tax expense (benefit) | 61,267 | (20,328) | 10,059 | ||||||||||||||
| Total provision for income taxes | $ | 302,158 | $ | 311,700 | $ | 325,176 | |||||||||||
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the deferred tax assets and liabilities are as follows (in thousands):
| December 27, 2025 | December 28, 2024 | ||||||||||
| Tax assets: | |||||||||||
| Inventory valuation | $ | 39,048 | $ | 36,312 | |||||||
| Accrued employee benefits costs | 23,107 | 19,409 | |||||||||
| Operating lease liabilities | 1,006,509 | 875,226 | |||||||||
| Deferred compensation | 15,657 | 14,218 | |||||||||
| Workers' compensation insurance | 17,608 | 16,715 | |||||||||
| Income tax credits | 16,179 | 20,230 | |||||||||
| Amortization | — | 22,424 | |||||||||
| Depreciation | 22,319 | 21,774 | |||||||||
| Other | 49,706 | 50,133 | |||||||||
| Total deferred tax asset | 1,190,133 | 1,076,441 | |||||||||
| Tax liabilities: | |||||||||||
| Operating lease right-of-use assets | (956,793) | (836,610) | |||||||||
| Depreciation | (237,666) | (219,856) | |||||||||
| Amortization | (36,924) | — | |||||||||
| Other | (31,584) | (25,467) | |||||||||
| Total deferred tax liability | (1,262,967) | (1,081,933) | |||||||||
Net deferred tax liability | $ | (72,834) | $ | (5,492) | |||||||
The Company has evaluated the need for a valuation allowance for all or a portion of the deferred tax assets. The Company believes that all of the deferred tax assets will more likely than not be realized through future earnings. The Company had state tax credit carryforwards of $18.2 million and $23.3 million as of December 27, 2025 and December 28, 2024, respectively, with varying dates of expiration through 2050. The Company provided no valuation allowance as of December 27, 2025 and December 28, 2024 for state tax credit carryforwards, as the Company believes it is more likely than not that all of these credits will be utilized before their expiration dates.
A reconciliation of the provision for income taxes to the amounts computed at the federal statutory rate is as follows (in thousands):
| Fiscal Year | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| $ | 293,631 | 21.0 | % | $ | 296,717 | 21.0 | % | $ | 300,804 | 21.0 | % | ||||||||||||||||||||||||
State and local income taxes, net of federal income tax effects (a) | 32,807 | 2.4 | 25,327 | 1.8 | 32,931 | 2.3 | |||||||||||||||||||||||||||||
| Tax credits | (19,775) | (1.4) | (7,268) | (0.5) | (6,743) | (0.5) | |||||||||||||||||||||||||||||
| Nontaxable or nondeductible items | 1,432 | 0.1 | (4,040) | (0.3) | (4,956) | (0.3) | |||||||||||||||||||||||||||||
| Changes in unrecognized tax benefits | 3,343 | 0.2 | 964 | 0.1 | 3,140 | 0.2 | |||||||||||||||||||||||||||||
| Other adjustments | (9,280) | (0.7) | — | — | — | — | |||||||||||||||||||||||||||||
| Total income tax expense | $ | 302,158 | 21.6 | % | $ | 311,700 | 22.1 | % | $ | 325,176 | 22.7 | % | |||||||||||||||||||||||
(a) For each respective fiscal year, state taxes in the following states contributed to the majority of the tax effect in this category:
2025: Tennessee, California, New York, Michigan, New Jersey, and Texas
2024: California, New York, Michigan, New Jersey, Texas, Maine, and Arizona
2023: California, New York, Michigan, New Jersey, Pennsylvania, Tennessee, Texas, and Kansas
The Company and its affiliates file income tax returns in the U.S. and various state and local jurisdictions. With few exceptions, the Company is no longer subject to federal, state and local income tax examinations by tax authorities for years before
2022. Various states have completed an examination of our income tax returns for 2017 through 2021 with minimal adjustments.
The total amount of unrecognized tax positions that, if recognized, would increase the effective tax rate, is $10.6 million at December 27, 2025. In addition, the Company recognizes current interest and penalties accrued related to these uncertain tax positions as interest expense, and the amount is not material to the Consolidated Statements of Income.
A reconciliation of the beginning and ending gross amount of unrecognized tax benefits (exclusive of interest and penalties) is as follows (in thousands):
| Fiscal Year | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Balance at beginning of year | $ | 9,308 | $ | 9,265 | $ | 5,362 | |||||||||||
| Additions based on tax positions related to the current year | 1,516 | 1,698 | 2,211 | ||||||||||||||
| Additions for tax positions of prior years | 3,016 | 116 | 2,038 | ||||||||||||||
| Reductions for tax positions of prior years | (1,028) | (1,771) | (346) | ||||||||||||||
| Balance at end of year | $ | 12,812 | $ | 9,308 | $ | 9,265 | |||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 17, 2022 | |
| 2020 | Feb 18, 2021 | |
| 2019 | Feb 20, 2020 | |
| 2018 | Feb 21, 2019 | |
| 2017 | Feb 22, 2018 | |
| 2016 | Feb 23, 2017 | |
| 2015 | Feb 23, 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.