Income Taxes |
9 Months Ended |
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Jun. 26, 2026 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Income Taxes Our income tax expense, deferred tax assets and liabilities, and unrecognized tax benefits reflect management's best assessment of estimated current and future liabilities. We are subject to income taxes in the U.S. and numerous foreign jurisdictions. Significant judgments and estimates are required in determining the consolidated income tax expense. On July 4, 2025, the U.S. Congress passed budget reconciliation bill H.R. 1 referred to as the One Big Beautiful Bill Act ("OBBBA"). The OBBBA contains several changes to corporate taxation including modifications to capitalization of research and development expenses, limitations on deductions for interest expense, and accelerated fixed asset depreciation. The international provisions are generally effective for our fiscal 2027. Dolby currently anticipates that the tax changes within OBBBA will not have a material impact to its financial statements. Dolby continues to review the OBBBA tax provisions to assess impacts to its financial statements. Unrecognized Tax Benefits As of June 26, 2026, the total amount of gross unrecognized tax benefits was $92.7 million, of which $30.5 million, if recognized, would reduce our effective tax rate. As of September 26, 2025, the total amount of gross unrecognized tax benefits was $83.7 million, of which $28.1 million, if recognized, would reduce our effective tax rate. The fiscal year-to-date period ended June 26, 2026 increase was primarily due to current year reserves for transfer pricing and interest accruals. Our liability for unrecognized tax benefits is classified within other non-current liabilities in our unaudited interim condensed consolidated balance sheets. Effective Tax Rate Each period, the combination of multiple different factors can impact our effective tax rate. These factors include recurring items such as tax rates and the relative amount of income earned in foreign jurisdictions, as well as discrete items that may occur in, but are not necessarily consistent between periods. Our effective tax rate in the third quarter of fiscal 2026 was 33.3% or a tax expense of $14.6 million and our effective tax rate in the third quarter of fiscal 2025 was 16.2% or a tax expense of $9.0 million. The increase in our effective tax rate was primarily due to lower tax benefits from prior-year tax return true-ups related to U.S. federal research and development tax credits. Our effective tax rate in the fiscal year-to-date period ended June 26, 2026 was 24.1% or a tax expense of $56.8 million and our effective tax rate in the fiscal year-to-date period ended June 27, 2025 was 21.0% or a tax expense of $55.0 million. The increase in our effective tax rate was primarily due to lower tax benefits from prior-year tax return true-ups related to U.S. federal research and development tax credits. Our effective tax rate for the third quarter of fiscal 2026 and the fiscal year-to-date period ended June 26, 2026 exceeded the Federal statutory rate of 21%, primarily due to lower tax benefits from U.S. federal research and development tax credits.
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