The FASB has issued an Exposure Draft that is intended to enhance the transparency and decision usefulness of income tax disclosures. Current GAAP disclosure requirements would be updated to include consistent categories to be used in the rate reconciliation and greater disaggregation of information in both the rate reconciliation and in regards to taxes paid.

Among other things, new disclosures include rate reconciliation presented in both reporting currency and percentages, separate disclosure of reconciling items greater than 5%, pre-tax income disaggregated between foreign and domestic jurisdictions and income tax expense disaggregated between federal, state and foreign taxes. The enhanced disclosures would provide users with better information to assess an entity’s tax risks and opportunities. These changes would apply to public business entities; other entities would also have limited additional disclosures.

The proposed amendments would be applied retrospectively. The effective date and other adoption provisions will be determined at a later date. The FASB has requested feedback on a number of questions related to the proposed changes. Comments on the proposed ASU are due by May 30, 2023.

The full text of the Exposure Draft is available here.

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