Wendy's CoWEN
Wendy's Co Income Taxes Disclosure
Income Taxes
Income before income taxes is set forth below:
| Year Ended | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Domestic | $ | 210,514 | $ | 254,309 | $ | 264,423 | |||||||||||
| Foreign (a) | 16,732 | 18,104 | 14,995 | ||||||||||||||
| $ | 227,246 | $ | 272,413 | $ | 279,418 | ||||||||||||
_______________
(a)Excludes foreign income of domestic subsidiaries.
The (provision for) benefit from income taxes is set forth below:
| Year Ended | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current: | |||||||||||||||||
| U.S. federal | $ | (16,541) | $ | (55,875) | $ | (50,435) | |||||||||||
| U.S. state | (7,263) | (12,888) | (13,730) | ||||||||||||||
| Foreign | (14,906) | (14,822) | (11,620) | ||||||||||||||
| Current tax provision | (38,710) | (83,585) | (75,785) | ||||||||||||||
| Deferred: | |||||||||||||||||
| U.S. federal | (19,543) | 10,786 | 2,163 | ||||||||||||||
| U.S. state | (4,489) | (5,409) | 564 | ||||||||||||||
| Foreign | 571 | 152 | (1,920) | ||||||||||||||
| Deferred tax (provision) benefit | (23,461) | 5,529 | 807 | ||||||||||||||
| Income tax provision | $ | (62,171) | $ | (78,056) | $ | (74,978) | |||||||||||
Deferred tax assets (liabilities) are set forth below:
| Year End | |||||||||||
| December 28, 2025 | December 29, 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Operating and finance lease liabilities | $ | 341,414 | $ | 333,033 | |||||||
| Net operating loss and credit carryforwards | 52,753 | 51,667 | |||||||||
| Deferred revenue | 22,953 | 23,085 | |||||||||
| Other | 46,509 | 51,626 | |||||||||
| Valuation allowances | (44,737) | (38,536) | |||||||||
| Total deferred tax assets | 418,892 | 420,875 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Operating and finance lease assets | (307,378) | (300,498) | |||||||||
| Intangible assets | (291,333) | (282,186) | |||||||||
| Fixed assets | (66,902) | (61,160) | |||||||||
| Other | (41,032) | (40,451) | |||||||||
| Total deferred tax liabilities | (706,645) | (684,295) | |||||||||
| $ | (287,753) | $ | (263,420) | ||||||||
The amounts and expiration dates of tax credit and net operating loss carryforwards are as follows:
| Amount | Expiration | ||||||||||
| Tax credit carryforwards: | |||||||||||
| U.S. federal foreign tax credits | $ | 25,704 | 2027-2034 | ||||||||
| Foreign tax credits of non-U.S. subsidiaries | 856 | Indefinite | |||||||||
| Total | $ | 26,560 | |||||||||
| Net operating loss carryforwards (pre-tax): | |||||||||||
| State and local net operating loss carryforwards | $ | 687,277 | 2026-2035 | ||||||||
| State and local net operating loss carryforwards | 212,125 | Indefinite | |||||||||
| Foreign net operating loss carryforwards | 1,692 | Indefinite | |||||||||
| Total | $ | 901,094 | |||||||||
The Company’s valuation allowances of $44,737 and $38,536 as of December 28, 2025 and December 29, 2024, respectively, relate primarily to foreign tax credit and foreign and state net operating loss carryforwards. The relative presence of Company-operated restaurants in various states impacts expected future state taxable income available to utilize state net operating loss carryforwards.
The current portion of refundable income taxes was $17,055 and $3,587 as of December 28, 2025 and December 29, 2024, respectively, and is included in “Accounts and notes receivable, net.” There were no long-term refundable income taxes as of December 28, 2025 and December 29, 2024.
The reconciliation of income tax computed at the U.S. federal statutory rate of 21% to reported income tax is set forth below:
| Year Ended | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| U.S. federal statutory tax rate (21%) | $ | 47,722 | 21.0 | % | $ | 57,207 | 21.0 | % | $ | 58,678 | 21.0 | % | |||||||||||||||||||||||
| State and local income taxes, net of federal income tax effect | 9,284 | 4.1 | % | 14,455 | 5.3 | % | 10,401 | 3.7 | % | ||||||||||||||||||||||||||
| Foreign tax effects | 1,137 | 0.5 | % | 2,106 | 0.8 | % | 2,687 | 1.0 | % | ||||||||||||||||||||||||||
| Effects of cross-border tax laws | (335) | (0.1) | % | (1,669) | (0.6) | % | (2,403) | (0.9) | % | ||||||||||||||||||||||||||
| Tax credits | (931) | (0.4) | % | (899) | (0.3) | % | (1,050) | (0.4) | % | ||||||||||||||||||||||||||
| Changes in valuation allowance: | |||||||||||||||||||||||||||||||||||
| Foreign tax credits | 4,320 | 1.9 | % | 4,274 | 1.5 | % | 2,761 | 1.0 | % | ||||||||||||||||||||||||||
| Other | 359 | 0.2 | % | — | 0.0 | % | 1,739 | 0.6 | % | ||||||||||||||||||||||||||
| Nontaxable or nondeductible items | 987 | 0.4 | % | 2,626 | 1.0 | % | 1,581 | 0.6 | % | ||||||||||||||||||||||||||
| Other adjustments | (372) | (0.2) | % | (44) | 0.0 | % | 584 | 0.2 | % | ||||||||||||||||||||||||||
| $ | 62,171 | 27.4 | % | $ | 78,056 | 28.7 | % | $ | 74,978 | 26.8 | % | ||||||||||||||||||||||||
In 2025, state and local income taxes in Michigan, Florida, Georgia and California comprised the majority (greater than 50%) of the tax effect in the state and local income taxes, net of federal income tax effect category. In 2024, state and local income taxes in Louisiana, Florida and Illinois comprised the majority of the tax effect in the state and local income taxes, net of federal income tax category. In 2023, state and local income taxes in Florida, Illinois and Massachusetts comprised the majority of the tax effect in the state and local income taxes, net of federal income tax effect category.
The income taxes paid (net of refunds) by jurisdiction are set forth below:
| Year Ended | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| U.S. federal | $ | 29,859 | $ | 52,774 | $ | 53,057 | |||||||||||
| U.S. state | 10,558 | 12,476 | 15,716 | ||||||||||||||
| Foreign | 8,697 | 8,350 | 6,417 | ||||||||||||||
| Total | $ | 49,114 | $ | 73,600 | $ | 75,190 | |||||||||||
Income taxes paid (net of refunds) exceeded 5% of total income taxes paid (net of refunds) in the following jurisdictions:
| Year Ended | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| U.S. state: | |||||||||||||||||
| Florida | $ | 3,210 | $ | 3,777 | $ | 4,300 | |||||||||||
| Illinois | $ | 2,497 | * | * | |||||||||||||
| Foreign: | |||||||||||||||||
| Canada | $ | 8,562 | $ | 8,192 | $ | 6,300 | |||||||||||
_______________
* The amount of income taxes paid during the year does not meet the 5% disaggregation threshold.
The Company participates in the Internal Revenue Service (the “IRS”) Compliance Assurance Process (“CAP”). As part of CAP, tax years are examined on a contemporaneous basis so that all or most issues are resolved prior to the filing of the tax return. As such, our tax returns for fiscal years through 2023 have been settled. The Company or one of its subsidiaries also files tax returns in various state, local and foreign jurisdictions. The statute of limitations in these jurisdictions vary but generally income tax returns from its 2020 fiscal year and forward remain subject to examination. We believe that adequate provisions have been made for any liabilities, including interest and penalties that may result from the completion of these examinations.
Unrecognized Tax Benefits
As of December 28, 2025, the Company had unrecognized tax benefits of $19,048, which, if resolved favorably, would reduce income tax expense by $15,048. A reconciliation of the beginning and ending amount of unrecognized tax benefits follows:
| Year Ended | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Beginning balance | $ | 14,805 | $ | 16,719 | $ | 17,404 | |||||||||||
| Additions: | |||||||||||||||||
| Tax positions of current year | 119 | 375 | 836 | ||||||||||||||
| Tax positions of prior years (a) | 5,832 | — | — | ||||||||||||||
| Reductions: | |||||||||||||||||
| Tax positions of prior years (b) | (583) | (2,069) | (690) | ||||||||||||||
| Settlements | — | — | (249) | ||||||||||||||
| Lapse of statute of limitations | (1,125) | (220) | (582) | ||||||||||||||
| Ending balance | $ | 19,048 | $ | 14,805 | $ | 16,719 | |||||||||||
_______________
(a)Increase in uncertain tax benefits related to tax positions of prior years during 2025 was primarily driven by adjustments to state income tax positions.
(b)Reduction in uncertain tax benefits related to tax positions of prior years during 2024 was primarily driven by a non-recurring state rate law change.
During 2025, 2024 and 2023, the Company recognized (income) expense for interest of $(214), $376 and $134, respectively. The Company has $1,141 and $1,355 accrued for interest related to uncertain tax positions as of December 28, 2025 and December 29, 2024, respectively.
One Big Beautiful Bill Act
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted. Key provisions include the permanent extension of several business tax incentives originally established under the 2017 Tax Cuts and Jobs Act, as well as changes to provisions related to bonus depreciation, and research and development. The OBBBA resulted in an impact to the Company’s current and deferred tax assets and liabilities as of December 28, 2025, as well as a favorable impact on the amount of cash taxes paid during 2025.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 23, 2026 | Showing above |
| 2024 | Feb 21, 2025 | |
| 2023 | Mar 1, 2023 | |
| 2022 | Mar 1, 2022 | |
| 2021 | Mar 3, 2021 | |
| 2019 | Feb 26, 2020 | |
| 2018 | Feb 27, 2019 | |
| 2017 | Feb 28, 2018 | |
| 2016 | Mar 3, 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.