Walmart Inc.WMT

Walmart Inc. Income Taxes Disclosure

10-KFiled Mar 13, 20265 min read
Taxes
The components of income before income taxes are as follows:
 Fiscal Years Ended January 31,
(Amounts in millions)202620252024
U.S.$23,272 $18,571 $20,092 
Non-U.S.6,197 7,738 1,756 
Total income before income taxes$29,469 $26,309 $21,848 
A summary of the provision for income taxes is as follows:
 Fiscal Years Ended January 31,
(Amounts in millions)202620252024
Current:
U.S. federal$2,128 $3,478 $3,215 
U.S. state and local678 886 762 
Non-U.S.2,116 2,451 1,772 
Total current tax provision4,922 6,815 5,749 
Deferred:
U.S. federal2,010 (214)(438)
U.S. state and local294 30 141 
Non-U.S.
(27)(479)126 
Total deferred tax expense (benefit)2,277 (663)(171)
Total provision for income taxes$7,199 $6,152 $5,578 
A summary of the cash paid for income taxes is as follows:
Fiscal Year Ended January 31,
(Amounts in millions)2026
Cash taxes paid in total$5,364 
U.S. federal1,743 
U.S. state and local895 
Non-U.S.
2,726 
Cash taxes paid by jurisdiction
U.S. federal1,743 
Mexico1,285 
China382 
Effective Income Tax Rate Reconciliation
A reconciliation of the significant differences between the U.S. statutory tax rate and the effective income tax rate on pre-tax income from continuing operations for fiscal year 2026 is as follows:
Fiscal Year Ended
January 31, 2026
AmountPercent
U.S. federal statutory tax rate$6,188 21.0 %
State and local income tax, net of federal (national) income tax effect760 2.6 %
Foreign tax effects
India
Changes in valuation allowances461 1.6 %
Other(93)(0.3)%
Luxembourg
Changes in valuation allowances(1,811)(6.1)%
Internal reorganization1,814 6.2 %
Other83 0.3 %
Other foreign jurisdictions498 1.7 %
Effect of cross-border tax laws400 1.4 %
Tax credits
Foreign tax credits
(586)(2.0)%
Research and development tax credits(323)(1.1)%
Other(167)(0.6)%
Changes in valuation allowances374 1.3 %
Nontaxable or nondeductible items
Share based compensation(373)(1.3)%
Internal reorganization(349)(1.2)%
Other132 0.4 %
Changes in unrecognized tax benefits301 1.0 %
Other adjustments(110)(0.5)%
Effective income tax rate$7,199 24.4 %
A reconciliation of the significant differences between the U.S. statutory tax rate and the effective income tax rate on pre-tax income from continuing operations for fiscal years 2025 and 2024 is as follows:
 Fiscal Years Ended January 31,
 20252024
U.S. statutory tax rate21.0 %21.0 %
U.S. state income taxes, net of federal income tax benefit2.8 %3.0 %
Income taxed outside the U.S.1.3 %0.1 %
Valuation allowance0.4 %1.2 %
Net impact of repatriated international earnings(0.6)%(0.4)%
Federal tax credits(1.4)%(1.5)%
Change in unrecognized tax benefits0.3 %0.6 %
Other, net(0.4)%1.5 %
Effective income tax rate23.4 %25.5 %
Deferred Taxes
The significant components of the Company's deferred tax account balances are as follows:
 January 31,
(Amounts in millions)20262025
Deferred tax assets:
Loss and tax credit carryforwards$4,615 $7,539 
Accrued liabilities3,504 3,009 
Lease obligations5,181 4,611 
Other1,239 1,339 
Total deferred tax assets14,539 16,498 
Valuation allowances(4,421)(7,405)
Deferred tax assets, net of valuation allowances10,118 9,093 
Deferred tax liabilities:
Property and equipment6,122 4,303 
Acquired intangibles1,066 1,096 
Inventory3,570 3,336 
Lease right of use assets5,345 4,816 
Other1,373 813 
Total deferred tax liabilities17,476 14,364 
Net deferred tax liabilities$7,358 $5,271 
The deferred taxes noted above are classified as follows in the Company's Consolidated Balance Sheets:
January 31,
(Amounts in millions)20262025
Balance Sheet classification
Assets:
Other long-term assets$1,891 $1,748 
Liabilities:
Deferred income taxes and other9,249 7,019 
Net deferred tax liabilities$7,358 $5,271 
Net Operating Losses, Tax Credit Carryforwards and Valuation Allowances
As of January 31, 2026, the Company's net operating loss and capital loss carryforwards totaled approximately $19.6 billion. Of these carryforwards, approximately $13.1 billion will expire, if not utilized, in various years through 2046. The remaining carryforwards have no expiration.
The realizability of these future tax deductions and credits is evaluated by assessing the adequacy of future expected taxable income from all sources, including taxable income in prior carryback years, reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies. To the extent the Company does not consider it more likely than not that a deferred tax asset will be recovered, a valuation allowance is generally established. To the extent that a valuation allowance was established and it is subsequently determined that it is more likely than not that the deferred tax assets will be recovered, the change in the valuation allowance is recognized in the Consolidated Statements of Income.
The Company had valuation allowances of approximately $4.4 billion and $7.4 billion as of January 31, 2026 and 2025, respectively, on deferred tax assets associated primarily with the net operating loss carryforwards.
Uncertain Tax Positions
The benefits of uncertain tax positions are recorded in the Company's Consolidated Financial Statements only after determining a more-likely-than-not probability that the uncertain tax positions will withstand challenge, if any, from taxing authorities.
As of January 31, 2026 and 2025, the amount of gross unrecognized tax benefits related to continuing operations was $2.4 billion and $3.8 billion, respectively. The amount of unrecognized tax benefits that would affect the Company's effective income tax rate was $2.0 billion as of January 31, 2026 and 2025.
A reconciliation of gross unrecognized tax benefits from continuing operations is as follows:
 Fiscal Years Ended January 31,
(Amounts in millions)202620252024
Gross unrecognized tax benefits, beginning of year$3,757 $3,540 $3,307 
Increases related to prior year tax positions342 445 336 
Decreases related to prior year tax positions(1,360)(228)(74)
Increases related to current year tax positions94 93 102 
Settlements during the period(328)(77)(102)
Lapse in statutes of limitations(65)(16)(29)
Gross unrecognized tax benefits, end of year$2,440 $3,757 $3,540 
The Company classifies interest and penalties related to uncertain tax benefits as interest expense and as operating, selling, general and administrative expenses, respectively. Interest expense and penalties related to these positions were immaterial for fiscal 2026, 2025 and 2024.
The Company remains subject to income tax examinations for its U.S. federal income taxes generally for fiscal 2018 through 2025. The Company also remains subject to income tax examinations for international income taxes for fiscal 2015 through 2025, and for U.S. state and local income taxes generally for the fiscal years ended 2018 through 2025. With few exceptions, the Company is no longer subject to U.S. federal, state, local or foreign examinations by tax authorities for years before fiscal 2015.
Other Taxes
The Company is subject to tax examinations for value added, sales-based, payroll and other non-income taxes. A number of these examinations are ongoing in various jurisdictions. In certain cases, the Company has received assessments and judgments from the respective taxing authorities in connection with these examinations. Unless otherwise indicated, the possible losses or range of possible losses associated with these matters are individually immaterial, but a group of related matters, if decided adversely to the Company, could result in a liability material to the Company's Consolidated Financial Statements.

Historical Timeline

Fiscal YearFiled
2026Mar 13, 2026Showing above
2025Mar 14, 2025
2024Mar 15, 2024
2023Mar 17, 2023
2022Mar 18, 2022

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.

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