Income tax expense
Financial Accounting glossary · The Accounting Cycle & Financial Statements
Definition
Current plus deferred tax expense reported in P&L; reconciled to statutory rate via effective-tax-rate disclosure.
Income tax expense in plain English
Income tax expense is the total tax a company records for the year on its profits — but with a twist: it's not just the check written to the government now, it also includes taxes that are 'baked in' for later. Because accounting rules and tax rules count things on slightly different timelines, part of your tax bill is 'current' (owed for this year) and part is 'deferred' (a timing difference that shifts to future years). Companies also explain why their real tax rate isn't just the plain government rate — that's the 'effective tax rate' reconciliation, like showing why your final grade differs from the raw test score once bonus points and penalties are added. Think of it as reporting both the tax you pay this year and the tax you've promised to sort out down the road.
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