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This summer, I blogged about FASB’s Exposure Draft to solicit public comment on proposed changes to ASU Topic 740: Income Taxes, which was FASB’s third attempt at tackling this topic. As reported in the WSJ, in late August, FASB unanimously approved the update to require “public and private companies to break out the income taxes paid to authorities at the federal, state and foreign levels for the full year in their annual financial reports.” Here’s more from the article giving a high-level summary of the new requirements:

If a particular jurisdiction represented more than 5% of these taxes for the year, businesses will have to identify that jurisdiction and specify the amount in their annual reports.

Public companies will need to share more detail on how they reconcile their domestic statutory rate with the rate they actually paid. The actual rate is usually lower because it includes the effects of tax credits and other breaks.

These companies will also have to present a standardized table showing how categories such as state and local income taxes, foreign taxes, tax credits and the enactment of new tax laws contribute to the difference between the two rates, the statutory rate and the actual one, by providing the percentages and dollar amounts.

This article from CFO Dive details the compliance dates as follows:

The new rules will be effective for public companies for fiscal years beginning after Dec. 15, 2024, and for private companies and other companies beginning after Dec. 15, 2025.

– Meredith Ervine