US Foods Holding Corp.USFD
US Foods Holding Corp. Income Taxes Disclosure
INCOME TAXES
The income tax provision for the fiscal years 2025, 2024 and 2023 consisted of the following:
| 2025 | 2024 | 2023 | |||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 104 | $ | 139 | $ | 140 | |||||||||||
| State | 32 | 21 | 23 | ||||||||||||||
| Current income tax provision | 136 | 160 | 163 | ||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | 64 | (24) | (4) | ||||||||||||||
| State | 22 | 14 | 13 | ||||||||||||||
| Deferred income tax provision | 86 | (10) | 9 | ||||||||||||||
| Total income tax provision | $ | 222 | $ | 150 | $ | 172 | |||||||||||
The Company’s effective income tax rates for the fiscal years ended December 27, 2025, December 28, 2024 and December 30, 2023 were 25%, 23% and 25%, respectively. The determination of the Company’s overall effective income tax rate requires the use of estimates. The effective income tax rate reflects the income earned and taxed in U.S. federal and various state jurisdictions based on enacted tax law, permanent differences between book and tax items, tax credits and the Company’s change in relative income in each jurisdiction. Changes in tax laws and rates may affect recorded deferred tax assets and liabilities and the Company’s effective income tax rate in the future.
On August 26, 2022, the U.S. government enacted the Inflation Reduction Act of 2022 (IRA) that includes provisions that allow a company to purchase transferable tax credits. In 2025, we executed agreements to purchase eligible tax credits for a total of $71 million, due to counterparties in 2026.
The reconciliation of the provision for income taxes at the U.S. federal statutory income tax rate of 21% to the Company’s income tax provision for the fiscal years 2025, 2024 and 2023 is shown below:
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||
| US federal statutory tax rate | $ | 189 | 21.0 | % | $ | 135 | 21.0 | % | $ | 142 | 21.0 | % | ||||||||||||||
State and local income taxes(a) | 42 | 4.7 | % | 32 | 4.9 | % | 31 | 4.6 | % | |||||||||||||||||
| Tax credits | (8) | (0.9) | % | (3) | (0.5) | % | (2) | (0.3) | % | |||||||||||||||||
| Non-taxable or non-deductible items | ||||||||||||||||||||||||||
| Stock-based compensation | (9) | (1.0) | % | (7) | (1.1) | % | (4) | (0.6) | % | |||||||||||||||||
| Other | 8 | 0.9 | % | 10 | 1.6 | % | 8 | 1.2 | % | |||||||||||||||||
| Changes in uncertain tax benefits | — | — | % | (17) | (2.6) | % | (3) | (0.4) | % | |||||||||||||||||
| Total income tax provision | $ | 222 | 24.7 | % | $ | 150 | 23.2 | % | $ | 172 | 25.4 | % | ||||||||||||||
(1) State Taxes in California, Florida, Illinois, New York, Oregon, Pennsylvania, Virginia (2025), Georgia (2024) and New Jersey (2023) made up the majority (greater than 50 percent) of the tax effect in this category.
Temporary differences and carryforwards that created significant deferred tax assets and liabilities were as follows:
| December 27, 2025 | December 28, 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Operating lease liabilities | $ | 88 | $ | 73 | |||||||
| Workers’ compensation, general and fleet liabilities | 63 | 55 | |||||||||
| Financing lease and other long term liabilities | 129 | 118 | |||||||||
| Other deferred tax assets | 95 | 119 | |||||||||
| Total gross deferred tax assets | 375 | 365 | |||||||||
| Less valuation allowance | (6) | (7) | |||||||||
| Total net deferred tax assets | 369 | 358 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Property and equipment | (234) | (227) | |||||||||
| Operating lease assets | (82) | (68) | |||||||||
| Intangibles | (352) | (311) | |||||||||
| Financing lease and other long term liabilities | (78) | (46) | |||||||||
| Other deferred tax liabilities | (49) | (41) | |||||||||
| Total deferred tax liabilities | (795) | (693) | |||||||||
| Net deferred tax liability | $ | (426) | $ | (335) | |||||||
The net deferred tax liabilities presented in the Company’s Consolidated Balance Sheets were as follows:
| December 27, 2025 | December 28, 2024 | ||||||||||
| Noncurrent deferred tax assets | $ | — | $ | — | |||||||
| Noncurrent deferred tax liability | (426) | (335) | |||||||||
| Net deferred tax liability | $ | (426) | $ | (335) | |||||||
The Company had tax affected state net operating loss carryforwards of $21 million as of December 27, 2025. The Company’s net operating loss carryforwards expire as follows:
| State | |||||
| 2026-2030 | $ | 2 | |||
| 2031-2035 | 4 | ||||
| 2036-2040 | 13 | ||||
| 2041-2045 | 1 | ||||
| Indefinite | 1 | ||||
| $ | 21 | ||||
The U.S. federal and state net operating loss carryforwards in the income tax returns filed included unrecognized tax benefits taken in prior years. The net operating losses for which a deferred tax asset is recognized for financial statement purposes in accordance with ASC 740, Income Taxes, are presented net of these unrecognized tax benefits.
Because of the change of ownership provisions of the Tax Reform Act of 1986, use of a portion of the Company’s domestic net operating losses and tax credit carryforwards may be limited in future periods. Further, a portion of the carryforwards may expire before being applied to reduce future income tax liabilities.
The Company maintained a valuation allowance on certain state net operating loss and other state tax attribute carryforwards expected to expire unutilized as a result of insufficient forecasted taxable income in the carryforward period or the utilization of which is subject to limitation.
A summary of the activity in the valuation allowance for the fiscal years 2025, 2024 and 2023 is as follows:
| 2025 | 2024 | 2023 | |||||||||||||||
| Balance at beginning of year | $ | 7 | $ | 10 | 16 | ||||||||||||
| Benefit recognized | (1) | (3) | (6) | ||||||||||||||
| Balance at end of year | $ | 6 | $ | 7 | $ | 10 | |||||||||||
The calculation of the Company’s tax liabilities involves uncertainties in the application of complex tax laws and regulations in U.S. federal and state jurisdictions. The Company (1) records unrecognized tax benefits as liabilities in accordance with ASC 740, Income Taxes and (2) adjusts these liabilities when the Company’s judgment changes because of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the current estimate of liabilities for unrecognized tax benefits. These differences will be reflected as increases or decreases to income tax expense in the period in which new information is available. The Company recognizes an uncertain tax position when it is more likely than not that the position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits.
Reconciliation of the beginning and ending amount of unrecognized tax benefits as of fiscal years 2025, 2024 and 2023 was as follows:
| Balance at January 1, 2023 | 30 | ||||
| Decreases due to lapses of statute of limitations | (4) | ||||
| Balance at December 30, 2023 | 26 | ||||
| Decreases due to lapses of statute of limitations | (18) | ||||
| Positions assumed in a business combination | 2 | ||||
| Balance at December 28, 2024 | 10 | ||||
| Decreases due to lapses of statute of limitations | (1) | ||||
| Increase for tax positions related to the current year | 1 | ||||
| Balance at December 27, 2025 | $ | 10 | |||
Included in the balance of unrecognized tax benefits as of the end of fiscal years 2025, 2024 and 2023 was $8 million, $8 million and $24 million, respectively, of tax benefits that, if recognized, would affect the effective income tax rate. The Company recognizes interest related to unrecognized tax benefits in interest expense and penalties in operating expenses. The Company had accrued interest and penalties of approximately $9 million and $8 million as of December 27, 2025 and December 28, 2024, respectively.
The Company files U.S. federal and state income tax returns in jurisdictions with varying statutes of limitations. Our 2022 through 2024 U.S. federal income tax years, and various state income tax years from 2001 through 2024, remain subject to income tax examinations by the relevant taxing authorities. Prior to 2007, the Company was owned by Royal Ahold N.V. (“Ahold”). Ahold indemnified the Company for 2007 pre-closing consolidated U.S. federal and certain combined state income taxes, and the Company is responsible for all other taxes, interest and penalties.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 12, 2026 | Showing above |
| 2024 | Feb 13, 2025 | |
| 2023 | Feb 15, 2024 | |
| 2022 | Feb 17, 2022 | |
| 2021 | Feb 16, 2021 | |
| 2019 | Feb 13, 2020 | |
| 2018 | Feb 14, 2019 | |
| 2017 | Feb 27, 2018 | |
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.