Wingstop Inc.WING
Wingstop Inc. Income Taxes Disclosure
| (9) | Income Taxes | ||||
Income tax expense for the fiscal years 2025, 2024, and 2023 consisted of the following (in thousands):
| Fiscal Year | |||||||||||||||||
| December 27, 2025 | December 28, 2024 | December 30, 2023 | |||||||||||||||
Income (losses) before taxes | |||||||||||||||||
U.S. | $ | 134,071 | $ | 153,831 | $ | 97,182 | |||||||||||
Foreign | 103,118 | (6,641) | (2,872) | ||||||||||||||
Total income before taxes | $ | 237,189 | $ | 147,190 | $ | 94,310 | |||||||||||
| Current expense | |||||||||||||||||
| Federal | $ | 21,292 | $ | 32,597 | $ | 19,398 | |||||||||||
| State | 4,647 | 6,389 | 4,586 | ||||||||||||||
| Foreign | 1,120 | 1,296 | 610 | ||||||||||||||
| Deferred expense (benefit) | |||||||||||||||||
| Federal | 31,751 | (1,533) | (314) | ||||||||||||||
| State | 3,115 | (276) | (145) | ||||||||||||||
Foreign | 997 | — | — | ||||||||||||||
| Income tax expense | $ | 62,922 | $ | 38,473 | $ | 24,135 | |||||||||||
We adopted ASU 2023-09 "Income Taxes (Topic 740): Improvements To Income Tax Disclosures" on a prospective basis beginning with the year ended December 27, 2025. The following table presents required disclosure pursuant to ASU 2023-09 and reconciles the U.S. federal statutory tax amount and rate to our actual global effective amount and rate for the year ended December 27, 2025 (in thousands):
| December 27, 2025 | ||||||||||||||
U.S. federal statutory tax rate | $ | 49,809 | 21.00 | % | ||||||||||
State and local taxes, net of federal income tax effect (a) | 6,655 | 2.81 | ||||||||||||
Foreign tax effects | 2,117 | 0.89 | ||||||||||||
Effects of cross-border tax laws | ||||||||||||||
Subpart F income | 7,042 | 2.97 | ||||||||||||
Basis difference in foreign investments | 15,690 | 6.61 | ||||||||||||
| Other | (1,233) | (0.52) | ||||||||||||
Tax credits | (2,030) | (0.85) | ||||||||||||
Nontaxable or nondeductible items | ||||||||||||||
Excess tax benefits from equity compensation | (4,035) | (1.70) | ||||||||||||
Officer compensation disallowance | 8,560 | 3.61 | ||||||||||||
Reversal of GAAP gain on sale of business interest | (20,420) | (8.61) | ||||||||||||
| Other | (995) | (0.42) | ||||||||||||
Changes in unrecognized tax benefits | 3,114 | 1.31 | ||||||||||||
Other adjustments | (1,352) | (0.57) | ||||||||||||
Effective tax rate | 62,922 | 26.53 | % | |||||||||||
(a) State taxes in California and Texas made up the majority (greater than 50 percent) of the tax effect in this category.
The following table presents the required disclosures prior to adoption of ASU 2023-09 and reconciles the income tax at the U.S. federal statutory tax rate to the global effective income tax rate for fiscal years 2024 and 2023 in dollars (in thousands):
| December 28, 2024 | December 30, 2023 | |||||||||||||
| Expected income tax expense at statutory rate | $ | 30,910 | $ | 19,777 | ||||||||||
| Excess tax benefits from equity compensation | (2,404) | (1,275) | ||||||||||||
| Non-deductible expenses | 5,954 | 3,106 | ||||||||||||
| State tax expense, net of federal benefit | 4,771 | 3,164 | ||||||||||||
| Foreign tax expense | 1,296 | 610 | ||||||||||||
| Foreign tax and other tax credits | (2,708) | (1,760) | ||||||||||||
| Increase in unrecognized tax benefit | 672 | 398 | ||||||||||||
| Other | (18) | 115 | ||||||||||||
| Income tax expense | $ | 38,473 | $ | 24,135 | ||||||||||
The components of deferred tax assets (liabilities) were as follows (in thousands):
| December 27, 2025 | December 28, 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Deferred revenue | $ | 8,911 | $ | 6,671 | |||||||
| Accrued incentive compensation | 1,171 | 2,096 | |||||||||
| Stock based compensation | 1,753 | 1,766 | |||||||||
| Lease liabilities | 14,277 | 13,601 | |||||||||
| Intangible assets | 483 | 294 | |||||||||
| Other | 1,778 | 1,112 | |||||||||
| Net operating loss carry-forwards and credits | 538 | 538 | |||||||||
| Valuation allowance | (577) | (577) | |||||||||
| 28,334 | 25,501 | ||||||||||
| Deferred tax liabilities: | |||||||||||
| Intangible assets | (14,800) | (10,275) | |||||||||
Research and development expenses | (15,657) | (733) | |||||||||
| Right of use assets | (11,326) | (11,227) | |||||||||
| Property and equipment | (1,298) | (4,351) | |||||||||
Basis difference in foreign investments | (18,395) | — | |||||||||
| (61,476) | (26,586) | ||||||||||
| Net deferred tax liability | $ | (33,142) | $ | (1,085) | |||||||
The Company had a state net operating loss carry-forward of $23.3 million at December 27, 2025 and December 28, 2024. The state net operating loss carry forwards begin to expire in 2030.
The Company had a valuation allowance of $0.6 million against its deferred tax assets as of December 27, 2025 and December 28, 2024. In assessing whether a deferred tax asset will be realized, the Company considers whether it is more likely than not that either some portion or all of the deferred tax assets will not be realized. The Company considers the reversal of existing taxable temporary differences, projected future taxable income and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, the Company believes it is more likely than not that it will realize a portion of the benefits of the federal and state deductible differences.
The Company files income tax returns, which are periodically audited by various federal and state jurisdictions. The Company's income tax returns prior to tax year 2021 are generally considered closed to examination by the applicable tax authorities.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
| Balance as of December 26, 2022 | $ | 1,298 | |||
| Additions for tax positions of prior years | — | ||||
| Subtractions for tax positions of prior years | (65) | ||||
| Additions for tax positions of current year | 468 | ||||
| Subtractions for tax positions of current year | — | ||||
| Balance as of December 30, 2023 | 1,701 | ||||
| Additions for tax positions of prior years | — | ||||
| Subtractions for tax positions of prior years | (118) | ||||
| Additions for tax positions of current year | 740 | ||||
| Subtractions for tax positions of current year | — | ||||
| Balance as of December 28, 2024 | 2,323 | ||||
| Additions for tax positions of prior years | — | ||||
| Subtractions for tax positions of prior years | (76) | ||||
| Additions for tax positions of current year | 3,061 | ||||
| Subtractions for tax positions of current year | — | ||||
| Balance as of December 27, 2025 | $ | 5,308 | |||
As of December 27, 2025 and December 28, 2024, the accrued interest and penalties on the unrecognized tax benefits were $1.7 million and $0.9 million, respectively, excluding any related income tax benefits. The Company recorded accrued interest related to the unrecognized tax benefits and penalties as a component of the provision for income taxes recognized in the Consolidated Statement of Comprehensive Income.
At December 27, 2025 and December 28, 2024, the amount of unrecognized tax benefits was $5.3 million and $2.3 million, respectively, which, if ultimately recognized, would reduce the Company’s effective tax rate.
The components of income taxes paid were as follows (in thousands):
| December 27, 2025 | |||||||||||
Net income taxes paid - federal | $ | 21,394 | |||||||||
Net income taxes paid - state | |||||||||||
California | 2,417 | ||||||||||
Other states | 2,301 | ||||||||||
Net income taxes paid - foreign | 1,288 | ||||||||||
Income taxes paid | $ | 27,400 | |||||||||
On July 4, 2025, the One Big Beautiful Bill Act ("the Act") was signed into law. The Act makes permanent key elements of the Tax Cuts and Jobs Act, including 100 percent bonus depreciation, domestic research cost expensing, and makes modifications to the international tax framework. The Act includes multiple effective dates, with certain provisions effective in 2025 and others phased in through 2027. All relevant law changes taking effect in 2025 are reflected in the December 27, 2025 financial statements. We will continue to evaluate the impact of the Act's provisions that take effect in future years.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 18, 2026 | Showing above |
| 2024 | Feb 19, 2025 | |
| 2023 | Feb 21, 2024 | |
| 2022 | Feb 22, 2023 | |
| 2021 | Feb 16, 2022 | |
| 2020 | Feb 18, 2021 | |
| 2019 | Feb 19, 2020 | |
| 2018 | Feb 27, 2019 | |
| 2017 | Feb 23, 2018 | |
| 2016 | Mar 3, 2017 | |
| 2015 | Mar 4, 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.