v3.26.1
Income Taxes
 12 Months Ended
Jun. 30, 2026
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
The following table summarizes Income before income tax expense by U.S. and foreign jurisdictions:
For the years ended June 30,
202620252024
(in millions)
U.S.$2,274 $3,052 $2,097 
Foreign4 9 7 
Income before income tax expense$2,278 $3,061 $2,104 
Significant components of the Company’s provision for income tax expense were as follows:
For the years ended June 30,
202620252024
(in millions)
Current
Federal$198 $455 $300 
State and local69 138 41 
Foreign13 11 6 
Total current280 604 347 
Deferred
Federal259 164 168 
State and local14 1 36 
Foreign(2)(1)(1)
Total deferred271 164 203 
Provision for income taxes$551 $768 $550 
The following table is a reconciliation of income tax computed at the statutory rate to income tax expense:
For the years ended June 30,
202620252024
Amount%Amount%Amount%
(in millions, except %)
U.S. federal income tax rate$478 21 %$643 21 %$442 21 %
State and local income tax, net of federal income tax effect(a)
62 3 107 3 55 3 
Foreign tax effects— — 4 — — — 
Tax credits - research and development(9)— (14)— (17)(1)
Valuation allowance movement(1)— 10 — 37 2 
Nontaxable or nondeductible items
Nondeductible compensation30 1 17 1 18 1 
Tax (windfall) shortfall on share-based payment awards(26)(1)(7)— (1)— 
Other16 1 17 — 16 1 
Changes in unrecognized tax benefits5 — 2 — 5 — 
Other(4)(1)(11)— (5)(1)
Effective tax rate$551 24 %$768 25 %$550 26 %
(a)
State taxes in California, New York, Pennsylvania, New Jersey and Massachusetts contributed to the majority of the tax effect in this category in fiscal 2026, 2025 and 2024.
The following is a summary of the components of the deferred tax accounts:
As of June 30,
20262025
(in millions)
Deferred tax assets
Basis difference(a)
$2,108 $2,288 
Operating lease liabilities233 210 
Sports rights contracts70 90 
Tax credit carryforwards51 45 
Net operating loss carryforwards48 48 
Equity-based compensation47 44 
Other197 339 
Total deferred tax assets2,754 3,064 
Deferred tax liabilities
Operating lease ROU assets(206)(198)
Accrued liabilities— (10)
Total deferred tax liabilities(206)(208)
Net deferred tax asset before valuation allowance2,548 2,856 
Less: valuation allowance(109)(140)
Total net deferred tax assets(b)
$2,439 $2,716 
(a)
As a result of the Disney Transaction (See Note 14—Commitments and Contingencies under the heading "Tax Contingencies"), 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 $4 million and $5 million deferred tax liability recorded in Other liabilities in the Balance Sheets as of June 30, 2026 and 2025, respectively.
As of June 30, 2026, 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, 2026, the Company has $51 million of tax credit carryforwards primarily attributable to the corporate alternative minimum tax credit which can be carried forward indefinitely.
The net decrease in the valuation allowance to $109 million as of June 30, 2026 was primarily due to the valuation allowance decrease on the basis difference deferred tax asset.
The following table sets forth the change in the uncertain tax positions, excluding interest and penalties:
For the years ended June 30,
202620252024
(in millions)
Balance, beginning of year$50 $26 $26 
Additions for prior year tax positions(a)
3 26 6 
Reduction for prior year tax positions(b)
— (2)(6)
Balance, end of year$53 $50 $26 
(a)
The additions for prior year tax positions in fiscal 2026 is primarily due to state tax matters. 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 statute 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 $19 million and $15 million as of June 30, 2026 and 2025, respectively, and the amounts of interest income/expense recorded in each of fiscal 2026, 2025 and 2024 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 2026 is primarily attributable to state tax matters. As of June 30, 2026 and 2025, $22 million and $20 million respectively, would affect the Company's effective income tax rate if the Company's position with respect to the uncertainties is sustained.