Income Taxes

12 Months Ended

Jan. 31, 2026

5. Income Taxes

Deferred income taxes consist of the following:


(Dollars in Millions)	January 31, 2026	February 1, 2025
Deferred tax liabilities:
Property and equipment	$476	$431
Lease assets	981	1,024
Merchandise inventories	28	31
Total deferred tax liabilities	1,485	1,486
Deferred tax assets:
Lease obligations	1,298	1,336
Accrued and other liabilities, including stock-based compensation	156	188
Federal benefit on state tax reserves	15	16
Valuation allowance	(43)	(44)
Total deferred tax assets	1,426	1,496
Net deferred tax liability (asset)	$59	$(10)

Deferred tax assets included in other long-term assets totaled $32 million as of January 31, 2026 and $38 million as of February 1, 2025. As of January 31, 2026 and February 1, 2025, the Company had state net operating loss carryforwards, net of valuation allowances, of $16 million and $16 million, respectively, and state credit carryforwards, net of valuation allowances, of $2 million and $2 million, respectively, which will expire between 2026 and 2046.

The components of the Provision (benefit) for income taxes were as follows:


(Dollars in Millions)	2025	2024	2023
Current federal	$(4)	$87	$78
Current state	(1)	3	(14)
Deferred federal	60	(79)	(18)
Deferred state	9	(6)	10
Provision for income taxes	$64	$5	$56

The effective tax rate differs from the amount that would be provided by applying the statutory U.S. corporate tax rate due to the following items:


	2025
(Dollars in Millions)	Amount	Percentage
US federal statutory rate	$70	21.0%
State and local income taxes, net of federal income tax effect (a)	11	3.3%
Tax credits	(10)	(3.0%)
Nontaxable or nondeductible items	9	2.7%
Changes in unrecognized tax benefits	(7)	(2.1%)
Other adjustments	(9)	(2.9%)
Effective Tax Rate	$64	19.0%

(a)

State taxes in Texas, New York, Illinois, California, and Michigan for 2025 made up the majority (greater than 50 percent) of the tax effect in this category.


(Dollars in Millions)	2024	2023
Taxes computed at federal statutory rate	$24	$78
State income taxes, net of federal tax benefit	6	16
Uncertain tax positions	(13)	(28)
Federal tax credits	(9)	(9)
Other	(3)	(1)
Total	$5	$56
Effective tax rate	3.9%	15.1%

In fiscal years 2025, 2024 and 2023, we recorded a net tax benefit for the impact of favorable results from uncertain tax positions.

On July 4, 2025, the One Big Beautiful Bill Act (the "Act") was enacted and signed into law. The Act restores and makes permanent a number of corporate tax provisions, such as full expensing for US-based research and development expenditures and capital investments, as well as the calculation of the business interest expense limitation. The Company has evaluated the provisions of the Act and determined that while the legislation impacts the timing of certain tax deductions, it does not result in a material change to Kohl's effective tax rate.

We have analyzed filing positions in all of the federal and state jurisdictions where we are required to file income tax returns, as well as all open tax years in these jurisdictions. The significant federal and state returns subject to examination are the 2015 through 2025 tax years. Certain tax agencies have proposed adjustments, which we are currently appealing. If we do not prevail on our appeals, we do not anticipate that the adjustments would result in a material change in our financial position.

We assess our income tax positions and record tax liabilities for all years subject to examination based upon management’s evaluation of the facts and circumstances and information available at the reporting dates. For those income tax positions where it is more-likely-than-not, based on technical merits, that a tax benefit will be sustained upon the conclusion of an examination, we have recorded the largest amount of tax benefit having a cumulatively greater than 50% likelihood of being realized upon ultimate settlement with the applicable taxing authority, assuming that it has full knowledge of all relevant information. For those tax positions which do not meet the more-likely-than-not threshold regarding the ultimate realization of the related tax benefit, no tax benefit has been recorded in the financial statements. In addition, we provide for interest and penalties, as applicable, and record such amounts as a component of the overall income tax provision. A reconciliation of the beginning and ending gross amount of unrecognized tax benefits is as follows:


(Dollars in Millions)	2025	2024
Balance at beginning of year	$184	$200
Increases due to tax positions taken in prior years	3	2
Increases due to tax positions taken in current year	6	7
Decreases due to:
Tax positions taken in prior years	—	(17)
Settlements with taxing authorities	—	(5)
Lapse of applicable statute of limitations	(15)	(3)
Balance at end of year	$178	$184

The total gross amount of interest and penalties accrued was $20 million at January 31, 2026 and $21 million at February 1, 2025. Interest and penalties recognized during the years were a tax benefit of $1 million in 2025, $3 million in 2024, and $8 million in 2023.

Our net unrecognized tax benefits that, if recognized, would affect our effective tax rate were $168 million as of January 31, 2026 and $173 million as of February 1, 2025.

We have both payables and receivables for income taxes recorded on our balance sheet. Receivables included in other current assets totaled $4 million as of January 31, 2026 and $4 million as of February 1, 2025. Receivables included in other long term assets totaled $258 million as of January 31, 2026 and $283 million as of February 1, 2025. The majority of the receivable balance relates to the cash benefit of the 2020 net operating loss that has not yet been received. Payables included in current liabilities totaled $84 million as of January 31, 2026 and $158 million as of February 1, 2025.

Income taxes paid, net of refunds received, were as follows:


(Dollars in Millions)	2025
Federal	$41
State (a)	10
Total	$51

(a)

State tax payments in California for 2025 equal or exceed 5% of the total income taxes paid (net of refunds received).

Income taxes paid, excluding refunds received, for 2024 and 2023 were $78 million and $69 million, respectively.

- Definition

The entire disclosure for income tax.

+ References

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+ Details

KOHLS Corp 10-K