v3.25.2
Income Taxes
 12 Months Ended
Jun. 30, 2025
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
Income before income tax expense was attributable primarily to the U.S. jurisdiction. Significant components of the Company’s provision for income taxes were as follows:
For the years ended June 30,
202520242023
(in millions)
U.S.
Federal$429 $300 $127 
State, local and other175 47 35 
Total current604 347 162 
Deferred164 203 321 
Provision for income taxes$768 $550 $483 
The following table is a reconciliation of income tax computed at the statutory rate to income tax expense:
For the years ended June 30,
202520242023
U.S. federal income tax rate21 %21 %21 %
State and local taxes3 4 4 
Effect of enacted tax law changes— (2)1 
Valuation allowance movement— 2 2 
Nondeductible compensation1 1 — 
Effective tax rate25 %26 %28 %
The following is a summary of the components of the deferred tax accounts:
As of June 30,
20252024
(in millions)
Deferred tax assets
Basis difference(a)
$2,288 $2,645 
Operating lease liabilities210 232 
Sports rights contracts90 — 
Net operating loss carryforwards48 38 
Tax credit carryforwards45 96 
Equity-based compensation44 39 
Other339 238 
Total deferred tax assets3,064 3,288 
Deferred tax liabilities
Operating lease ROU assets(198)(220)
Accrued liabilities(10)(24)
Pension benefit obligations— (19)
Sports rights contracts— (33)
Total deferred tax liabilities(208)(296)
Net deferred tax asset before valuation allowance2,856 2,992 
Less: valuation allowance(140)(119)
Total net deferred tax assets(b)
$2,716 $2,873 
(a)
As a result of the Transaction (See Note 14—Commitments and Contingencies under the heading "Other"), which was a taxable transaction for which the estimated tax liability of $5.8 billion was included in the transaction tax paid by the Company, FOX obtained a tax basis in its assets equal to their respective fair market values. This amount includes the remaining estimated deferred tax asset recorded as a result of the additional tax basis.
(b)
Includes a $5 million deferred tax liability recorded in Other liabilities in the Balance Sheets as of June 30, 2025 and 2024.
As of June 30, 2025, the Company had $48 million of tax attributes from net operating loss carryforwards available to offset future taxable income. A substantial portion of these losses can be carried forward indefinitely. As of June 30, 2025, the Company has $45 million of tax credit carryforwards primarily attributable to the corporate alternative minimum tax credit which can be carried forward indefinitely.
The net increase in the valuation allowance to $140 million as of June 30, 2025 was primarily due to the additional valuation allowance required on tax attributes.
The following table sets forth the change in the uncertain tax positions, excluding interest and penalties:
For the years ended June 30,
202520242023
(in millions)
Balance, beginning of year$26 $26 $28 
Additions for prior year tax positions(a)
26 6 2 
Additions for current year tax positions— — 2 
Reduction for prior year tax positions(b)
(2)(6)(6)
Balance, end of year$50 $26 $26 
(a)
The additions for prior year tax positions in fiscal 2025 is primarily due to federal tax matters related to the corporate alternative minimum tax. The additions for prior year tax positions in fiscal 2024 is primarily due to the impact of state tax law changes.
(b)
The reduction for tax positions was primarily due to audit settlements or the expiration of statutes of limitations.
The Company recognizes interest and penalty charges related to uncertain tax positions as income tax (expense) benefit. The Company recorded liabilities for accrued interest of $15 million and $12 million as of June 30, 2025 and 2024, respectively, and the amounts of interest income/expense recorded in each of fiscal 2025, 2024 and 2023 were not material.
The Company is subject to tax primarily in various domestic jurisdictions and, as a matter of ordinary course, the Company is regularly audited by federal and state tax authorities. The Company believes it has appropriately accrued for the expected outcome of all pending tax matters and does not anticipate that the resolution of these pending tax matters will have a material adverse effect on its consolidated financial condition, future results of operations or liquidity. The movement in the balance of uncertain tax positions in fiscal 2025 is primarily attributable to federal tax matters. The Company does not expect significant changes to these positions over the next 12 months. As of June 30, 2025 and 2024, $20 million would affect the Company’s effective income tax rate if the Company’s position with respect to the uncertainties is sustained.