XML 30 R17.htm IDEA: XBRL DOCUMENT v3.25.2
INCOME TAXES
 9 Months Ended
Jun. 28, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
At the end of each reporting period, TD Group makes an estimate of its annual effective income tax rate. The estimate used in the year-to-date period may change in subsequent periods.
During the thirteen week periods ended June 28, 2025 and June 29, 2024, the effective income tax rate was 22.4% and 23.4%, respectively. During the thirty-nine week periods ended June 28, 2025 and June 29, 2024, the effective income tax rate was 21.9% and 22.5%, respectively. The Company’s lower effective income tax rate for the thirteen week period ended June 28, 2025 was primarily due to a more significant discrete benefit associated with share-based payments along with a less significant increase in the valuation allowance applicable to the Company's net interest deduction limitation compared to the prior period. The Company’s lower effective income tax rate for the thirty-nine week period ended June 28, 2025 was primarily due to a less significant increase in the valuation allowance applicable to Company's net interest deduction limitation, and a lower effective tax rate on non-U.S. earnings, slightly offset by a less significant benefit associated with share-based payments when compared to the same period in 2024. The Company’s effective income tax rate for the thirteen and thirty-nine week periods ended June 28, 2025 was higher than the federal statutory tax rate of 21% primarily due to an increase in the valuation allowance applicable to the Company’s net interest deduction limitation offset by the discrete impact of excess tax benefits associated with share-based payments.
The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state, local and foreign jurisdictions. The Company is no longer subject to U.S. federal examinations for years before fiscal 2018. The Company is currently under examination for its federal income taxes in Canada for fiscal years 2013 through 2019, in France for fiscal years 2020 through 2022, and in Germany for fiscal years 2017 through 2019. In addition, the Company is subject to state income tax examinations for fiscal years 2015 and later.
Unrecognized tax benefits at June 28, 2025 and September 30, 2024, the recognition of which would have an impact on the effective tax rate for each fiscal year, amounted to $15 million and $14 million, respectively. The Company classifies all income tax-related interest and penalties as income tax expense, which were not significant for the thirteen and thirty-nine week periods ended June 28, 2025 and June 29, 2024. As of June 28, 2025 and September 30, 2024, the Company accrued $5 million for the potential payment of interest and penalties. Within the next twelve months, it is reasonably possible that unrecognized tax benefits could be reduced by approximately $2 million resulting primarily from the resolution of tax examinations. Any increase in the amount of unrecognized tax benefits within the next twelve months is not expected to be material.
The Organization for Economic Co-operation and Development (the “OECD”) has proposed a framework comprised of rules and models, collectively referred to as Pillar Two (“P2”), that are designed to ensure that certain multi-national enterprises pay a minimum tax rate of 15% on reported profits arising in each jurisdiction where they operate. Although the OECD provided a framework for applying the minimum tax, individual countries have and may continue to enact P2 rules that are different than the OECD framework. While we continue to monitor P2 developments, we do not anticipate that P2 will have a material impact on our financial position in either the near nor the long-term.
On July 4, 2025, the One Big Beautiful Bill Act was signed into law in the U.S., which contains a broad range of tax reform provisions affecting businesses. We are currently evaluating the full effects of the legislation on our estimated annual effective tax rate and cash tax position. As the legislation was signed into law after the close of our third quarter, the impacts are not included in our operating results for the thirty-nine week period ended June 28, 2025.