New FASB Income Tax Disclosure Rules Will Enhance Transparency

The Financial Accounting Standards Board’s amended income tax disclosure rules, affecting reporting companies’ financial statements, will provide additional clarity and transparency about the nature and magnitude of the components or “drivers” of the accounting effective tax rate and income taxes paid in the federal, state, and foreign jurisdictions.

The updated accounting standard for income taxes (ASC 740), included in FASB Accounting Standards Update No. 2023-09 (Dec. 2023), will be effective in 2025 for public companies and 2026 for private companies, although early adoption is permitted. Companies can adopt the new disclosure requirements prospectively with no changes to comparative-period disclosures presented ...