FASB Issues Standard on Income Tax Disclosures
The Financial Accounting Standards Board (FASB) recently issued an Accounting Standards Update (ASU) that addresses requests for improved income tax disclosures from investors, lenders, creditors and other allocators of capital (collectively, “investors”) that use the financial statements to make capital allocation decisions.
The ASU is intended to improve the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures.
For public business entities, the standard is effective for annual periods beginning after Dec. 15, 2024. For other entities, the amendments are effective for annual periods beginning after Dec. 15, 2025. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance.
The ASU, including more information about transitioning to the new standard, is available at www.fasb.org.