SBUX · 10-K · 2026A · Full report

Income Tax Rate Changes

STARBUCKS CORP · 2026-11-12 · Importance 59 · Surprise 82

The effective tax rate increased to 34.2% in fiscal 2026 from 25.9% in fiscal 2025, while income tax expense rose to $1.315 billion from $651 million. Releasing remaining indefinite reinvestment assertions generated a $266 million discrete tax expense in the first quarter, increased by $8 million in the second quarter. The China divestiture and retained joint-venture interest generated $199.5 million of incremental tax expense, including approximately $147.8 million in the third quarter and the remainder in the fourth quarter. The filing attributes approximately 420 basis points of the rate increase to the reinvestment-assertion changes and approximately 240 basis points to the China divestiture.

Key facts

• Starbucks’ effective tax rate was 34.2% in fiscal 2026, compared with 25.9% in fiscal 2025. source
• The fiscal 2026 effective tax rate increase included a $273 million discrete impact from changes in indefinite reinvestment assertions related to classifying China retail operations as held for sale, approximately 420 basis points. source
• Starbucks recorded $199.5 million of incremental income tax expense in connection with the China divestiture and retained joint venture interest; approximately $147.8 million was recognized in the third quarter of fiscal 2026 and the remainder in the fourth quarter. source
• Starbucks released all remaining indefinite reinvestment assertions in the first quarter of fiscal 2026 and recorded a discrete tax expense of $266 million, increased by $8 million in the second quarter. source
• If Starbucks distributes foreign earnings to the U.S., it may incur additional foreign withholding taxes and U.S. state income taxes, which are currently not expected to be material. source
• Starbucks’s effective income tax rate in a given financial statement period could be materially affected if it prevails in matters for which a liability has been established or must pay amounts exceeding its established liability. source