FASB issues ASU to disaggregate income tax disclosures
Defining Issues | December 2023
The ASU enhances income tax disclosures for the effective tax rate reconciliation and income taxes paid.
ASU 2023-09 enhances annual income tax disclosures to address investor requests for more information about the tax risks and opportunities present in an entity’s worldwide operations.
Relevant dates
| Effective date | Public business entities | All other entities |
|---|---|---|
Annual periods – Fiscal years beginning after | Dec. 15, 2024 | Dec. 15, 2025 |
Early adoption for annual financial statements not yet issued or made available for issuance.
Key Impacts:
The ASU enhances income tax disclosures by requiring entities to disclose:
- For public business entities, a tabular reconciliation using both percentages and amounts, broken out into specific categories with certain reconciling items at or above 5% of the statutory (i.e. expected) tax further broken out by nature and/or jurisdiction.
- For all other entities, qualitative disclosure of the nature and effect of significant reconciling items by specific categories and individual jurisdictions.
- Income taxes paid (net of refunds received), broken out between federal (national), state/local and foreign, and amounts paid to an individual jurisdiction when 5% or more of the total income taxes paid.
The ASU also includes other amendments, such as replacing the term ‘public entity’ with ‘public business entity’ and the removal of certain disclosures.
Report contents
- Source and applicability
- Fast facts, impacts, actions
- Enhancements and other changes
- Tabular rate reconciliation for PBEs
- Transition
- Effective date
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FASB issues ASU - Improvements to income tax disclosures
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