The income tax expense of a company is the total amount of taxes that a company is obligated to pay to the government based on its taxable income. It includes both current tax liabilities and future tax liabilities or benefits.
Income tax expense is a line item in a company's income statement and plays a crucial role in assessing a company's net income. It is calculated by applying the applicable tax rate to the company's taxable income, which is the income after accounting for all allowable deductions and exemptions.
The income tax expense can differ from the actual tax paid due to timing differences, tax credits, and adjustments related to previous years. These adjustments may result in deferred tax assets or liabilities, which are recorded in the balance sheet.
Understanding a company's income tax expense is vital for investors as it impacts the company's bottom line and overall financial health. However, it should be analyzed in conjunction with other financial metrics and indicators.
For Amazon, the income tax expense is calculated by applying the tax rate to its taxable income, which is derived after deducting all allowable business expenses, such as cost of goods sold and operating expenses, from its total revenue.
Apple's income tax expense is determined by applying the tax rate to its taxable income. This taxable income is the income left after deducting business expenses like research & development costs, operating expenses, and cost of revenue from its total revenue.
For ExxonMobil, the income tax expense is calculated by applying the tax rate to its taxable income, which is the income after accounting for allowable deductions like cost of revenue, operating expenses, and interest expenses from its total revenue.