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Risk Management and Strategy
To help address cybersecurity threats, we have developed a strategy and implemented a program to identify, assess, and prioritize cybersecurity risks as part of our broader ERM program. We are committed to a risk-centric, layered information security approach to secure our data, systems, and services. We prioritize our data security initiatives and processes based on our assessment of known and anticipated threats to our data security. Utilizing the National Institute of Standards and Technology (NIST) Cybersecurity Framework, we strive for continuous improvement and utilize a metrics-based approach to identify and mitigate data security risks that could potentially impact our business operations or clients.
We maintain multiple levels of protection to mitigate data security risks, and we regularly test our systems to discover and address potential vulnerabilities, including without limitation:
•using a multi-layered, zero-trust principled approach to secure systems;
•systematic monitoring of our sites and services to detect and respond to unauthorized activity; and
•regular security audits and vulnerability assessments conducted by our dedicated internal information security team, our internal auditors, and by external third parties.
In addition, we engage in a broad range of activities to secure and protect the data that we obtain through our business operations including, but not limited to:
•continued development and enhancement of our controls, processes, and practices designed to protect our systems, computers, software, data, and networks from attack, damage, or unauthorized access;
•security and business controls to appropriately limit access to and use of personal information, including adaptive and multifactor authentication;
•comprehensive data protections, including encryption, to facilitate the secure storage, use, and transmission of sensitive data;
•annual privacy/data security training to all employees and contractors and regular awareness and testing activities year-round regarding social engineering threats, such as phishing, for employees;
•background checks on our employees, as permitted;
•due diligence requirements and controls for third parties (e.g., service providers) with access to sensitive data throughout the lifecycle of the relationship; and
•a dedicated global information security team that partners with all technology groups to monitor, prioritize, and remediate risks to the enterprise.
To help address cybersecurity threats, we have developed a strategy and implemented a program to identify, assess, and prioritize cybersecurity risks as part of our broader ERM program. We are committed to a risk-centric, layered information security approach to secure our data, systems, and services. We prioritize our data security initiatives and processes based on our assessment of known and anticipated threats to our data security. Utilizing the National Institute of Standards and Technology (NIST) Cybersecurity Framework, we strive for continuous improvement and utilize a metrics-based approach to identify and mitigate data security risks that could potentially impact our business operations or clients.
true true true
The Audit Committee of the Board of Directors has the primary responsibility of assisting our Board in the oversight of policies and processes pertaining to the ERM program and specifically considers risks and controls relating to, among other things, data and cybersecurity. Risks associated with cybersecurity threats are a top priority for ongoing oversight by the ERM team and the Enterprise Risk Committee. Our Vice President, Legal and Corporate Secretary, oversees the activities of the Enterprise Risk Committee and, together with the Chief Information Security Officer (CISO), briefs the Audit Committee and the Board of Directors on information security risk matters as a part of regular ERM reports, with a deep dive focused on information security at least annually (or more frequently if appropriate).
In addition, the Audit Committee receives regular reports on cybersecurity matters from the Chief Legal and Administrative Officer (CLAO) and the CISO. The Board of Directors is also updated by the CLAO and CISO on a periodic basis. Our CLAO, who reports directly to the President and CEO, has over 30 years of leadership experience across multiple industries in roles responsible for overseeing and managing risk. Our CISO, who reports directly to the CLAO, has extensive cybersecurity knowledge and skills gained from over 30 years of experience in consulting and technology roles, with more than 18 years of Information Security specialization. Our CISO is responsible for understanding, managing, and communicating cybersecurity risks internally to our management (including the Enterprise Risk Committee on which he serves), and works closely with our Legal department to oversee compliance with legal, regulatory, and contractual security requirements.
Our CISO heads the Information Security team, which is responsible for implementing, monitoring, and maintaining cybersecurity and data protection practices across our business. The Information Security team covers a wide range of cyber and information security responsibilities. Our CISO also receives reports on cybersecurity threats on an ongoing basis and regularly reviews risk management measures implemented by us to identify and mitigate cybersecurity risks. In addition to our internal capabilities, we also periodically engage external consultants, legal counsel, or other third-party advisors to assist with assessing, identifying, and managing cybersecurity risks.
The Audit Committee of the Board of Directors has the primary responsibility of assisting our Board in the oversight of policies and processes pertaining to the ERM program and specifically considers risks and controls relating to, among other things, data and cybersecurity. Risks associated with cybersecurity threats are a top priority for ongoing oversight by the ERM team and the Enterprise Risk Committee. Our Vice President, Legal and Corporate Secretary, oversees the activities of the Enterprise Risk Committee and, together with the Chief Information Security Officer (CISO), briefs the Audit Committee and the Board of Directors on information security risk matters as a part of regular ERM reports, with a deep dive focused on information security at least annually (or more frequently if appropriate).
In addition, the Audit Committee receives regular reports on cybersecurity matters from the Chief Legal and Administrative Officer (CLAO) and the CISO. The Board of Directors is also updated by the CLAO and CISO on a periodic basis. Our CLAO, who reports directly to the President and CEO, has over 30 years of leadership experience across multiple industries in roles responsible for overseeing and managing risk. Our CISO, who reports directly to the CLAO, has extensive cybersecurity knowledge and skills gained from over 30 years of experience in consulting and technology roles, with more than 18 years of Information Security specialization. Our CISO is responsible for understanding, managing, and communicating cybersecurity risks internally to our management (including the Enterprise Risk Committee on which he serves), and works closely with our Legal department to oversee compliance with legal, regulatory, and contractual security requirements.
Our CISO heads the Information Security team, which is responsible for implementing, monitoring, and maintaining cybersecurity and data protection practices across our business. The Information Security team covers a wide range of cyber and information security responsibilities. Our CISO also receives reports on cybersecurity threats on an ongoing basis and regularly reviews risk management measures implemented by us to identify and mitigate cybersecurity risks. In addition to our internal capabilities, we also periodically engage external consultants, legal counsel, or other third-party advisors to assist with assessing, identifying, and managing cybersecurity risks.
The Audit Committee of the Board of Directors has the primary responsibility of assisting our Board in the oversight of policies and processes pertaining to the ERM program and specifically considers risks and controls relating to, among other things, data and cybersecurity. true Our Vice President, Legal and Corporate Secretary, oversees the activities of the Enterprise Risk Committee and, together with the Chief Information Security Officer (CISO), briefs the Audit Committee and the Board of Directors on information security risk matters as a part of regular ERM reports, with a deep dive focused on information security at least annually (or more frequently if appropriate). Our CLAO, who reports directly to the President and CEO, has over 30 years of leadership experience across multiple industries in roles responsible for overseeing and managing risk. Our CISO, who reports directly to the CLAO, has extensive cybersecurity knowledge and skills gained from over 30 years of experience in consulting and technology roles, with more than 18 years of Information Security specialization. Our CISO is responsible for understanding, managing, and communicating cybersecurity risks internally to our management (including the Enterprise Risk Committee on which he serves), and works closely with our Legal department to oversee compliance with legal, regulatory, and contractual security requirements. true Our CISO also receives reports on cybersecurity threats on an ongoing basis and regularly reviews risk management measures implemented by us to identify and mitigate cybersecurity risks. false 2025 Deloitte & Touche LLP Kansas City, Missouri 2025 3473932000 3302337000 3156921000 287063000 308010000 315264000 3760995000 3610347000 3472185000 2086111000 1991566000 1923452000 846914000 813504000 800035000 2933025000 2805070000 2723487000 31546000 36125000 35492000 78113000 79080000 72978000 781403000 762322000 711212000 171953000 164359000 149412000 609450000 597963000 561800000 -1100000 -790000 2423000 -3677000 -2646000 -8100000 605773000 595317000 553700000 4.47 4.20 3.63 -0.02 -0.02 -0.05 4.45 4.18 3.58 4.42 4.14 3.56 -0.03 -0.02 -0.05 4.39 4.12 3.51 605773000 595317000 553700000 1090000 -11746000 -15454000 1090000 -11746000 -15454000 606863000 583571000 538246000 983277000 1053326000 19862000 21867000 55775000 61182000 63621000 69075000 95788000 95208000 1162548000 1239476000 828744000 838814000 135068000 131319000 521215000 461986000 259412000 264102000 802053000 785226000 317691000 271658000 65911000 65043000 3263898000 3218810000 144046000 155830000 107375000 105548000 296244000 318830000 349893000 209203000 206070000 191849000 191050000 1298610000 977328000 1143305000 1491095000 306134000 291063000 322847000 265373000 104106000 103357000 3175002000 3128216000 0 0 0.01 0.01 800000000 800000000 164367434 170915771 1644000 1709000 766998000 762583000 -47755000 -48845000 12061000 12654000 30420033 31324609 644052000 637507000 88896000 90594000 3263898000 3218810000 2025 605773000 595317000 553700000 116827000 121784000 130501000 65191000 82567000 52290000 -34612000 -40940000 49579000 32503000 34277000 31326000 62247000 108394000 57244000 -3183000 7287000 7011000 -23009000 -4662000 -67627000 -1575000 -28507000 -4773000 -20613000 75444000 144164000 -538000 1261000 -3064000 680883000 720860000 821841000 82034000 63678000 69698000 35518000 43358000 48246000 21705000 18891000 21633000 23786000 24926000 27350000 -10098000 -7143000 -10838000 -105373000 -93858000 -101389000 1950000000 1025000000 970000000 1950000000 1025000000 970000000 197330000 179775000 177925000 437133000 379569000 568952000 -12980000 -4967000 -4115000 -647443000 -564311000 -750992000 -121000 -2814000 -4857000 -72054000 59877000 -35397000 1075193000 1015316000 1050713000 1003139000 1075193000 1015316000 226820000 131173000 -45539000 74639000 75694000 69554000 2591000 3052000 2238000 50208000 44653000 42953000 193571000 1936000 772182000 -21645000 120405000 33641000 -661247000 211631000 553700000 553700000 -15454000 -15454000 27086000 27086000 -20258000 -1899000 1298000 25656000 3499000 443000 18734000 18734000 14635000 147000 8634000 543098000 551879000 1.16 177785000 177785000 178936000 1789000 770376000 -37099000 -48677000 32786000 -654325000 32064000 595317000 595317000 -11746000 -11746000 30733000 30733000 -33794000 -3703000 2305000 46267000 8770000 844000 29449000 29449000 8020000 80000 4732000 348808000 353620000 1.28 181475000 181475000 170916000 1709000 762583000 -48845000 12654000 31325000 -637507000 90594000 605773000 605773000 1090000 1090000 31132000 31132000 -22788000 -3377000 1492000 30490000 4325000 587000 37035000 37035000 6549000 65000 3929000 400104000 404098000 1.50 202885000 202885000 164367000 1644000 766998000 -47755000 12061000 30420000 -644052000 88896000
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS – Our subsidiaries provide assisted and do-it-yourself (DIY) tax return preparation solutions through multiple channels (including in-person, online and mobile applications, virtual, and desktop software) and distribute H&R Block-branded services and products, including those of our bank partners, to the general public primarily in the United States (U.S.), Canada and Australia. Tax returns are either prepared by H&R Block tax professionals (in company-owned or franchise offices, virtually or via an online review) or prepared and filed by our clients through our DIY tax solutions. We also offer small business solutions through our company-owned and franchise offices (including in-person, online and virtual) and online through Wave.
"H&R Block," "the Company," "we," "our" and "us" are used interchangeably to refer to H&R Block, Inc., to H&R Block, Inc. and its subsidiaries, or to H&R Block, Inc.'s operating subsidiaries, as appropriate to the context.
PRINCIPLES OF CONSOLIDATION – The consolidated financial statements include the accounts of the Company and our subsidiaries. Intercompany transactions and balances have been eliminated.
DISCONTINUED OPERATIONS – Our discontinued operations include the results of operations of Sand Canyon Corporation, previously known as Option One Mortgage Corporation, which exited its mortgage business in fiscal year 2008.
SEGMENT INFORMATION – We report a single segment that includes all of our continuing operations.
MANAGEMENT ESTIMATES – The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates, assumptions and judgments are applied in the evaluation of contingent losses associated with pending claims and litigation, reserves for uncertain tax positions, and fair value of reporting units. Estimates have been prepared based on the best information available as of each balance sheet date. As such, actual results could differ materially from those estimates.
CASH AND CASH EQUIVALENTS – All non-restricted highly liquid instruments maturing within three months at acquisition are considered to be cash equivalents.
Outstanding checks in excess of funds on deposit (book overdrafts) included in accounts payable totaled $2.4 million and $2.8 million as of June 30, 2025 and 2024, respectively.
CASH AND CASH EQUIVALENTS – RESTRICTED – Cash and cash equivalents – restricted consists primarily of cash held by our captive insurance subsidiary that is expected to be used to pay claims.
RECEIVABLES AND RELATED ALLOWANCES – Our trade receivables consist primarily of accounts receivable from tax clients for tax return preparation and related fees. The allowance for credit losses for these receivables requires management's judgment regarding collectibility and current economic conditions to establish an amount considered by management to be adequate to cover estimated losses as of the balance sheet date. Losses from tax clients for tax return preparation and related fees are not specifically identified and charged off; instead they are evaluated on a pooled basis. At the end of the fiscal year the outstanding balances on these receivables are evaluated based on collections received and expected collections over subsequent years. We establish an allowance for credit losses at an amount that we believe reflects the receivable at net realizable value. Typically in December of each year we charge-off the receivables to an amount we believe represents the net realizable value.
Our financing receivables consist primarily of participations in H&R Block Emerald Advance® (EA) term loans, loans made to franchisees, and amounts due under H&R Block's Instant Refund® (Instant Refund).
Our accounting policies related to receivables and related allowances are discussed further in note 4.
PROPERTY AND EQUIPMENT – Buildings, equipment and leasehold improvements are initially recorded at cost and are depreciated over the estimated useful life of the assets using the straight-line method. Estimated useful lives are generally 15 to 40 years for buildings, two to five years for computers and other equipment, three to five
years for purchased software and up to eight years for leasehold improvements. Property and equipment is retired when no longer in use.
GOODWILL AND INTANGIBLE ASSETS – Goodwill represents costs in excess of fair values assigned to the underlying net assets of acquired businesses. Goodwill is not amortized, but rather is tested for impairment annually as of February 1, or more frequently if indications of potential impairment exist.
Intangible assets, including internally-developed software, with finite lives are amortized over their estimated useful lives and are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Intangible assets are typically amortized over the estimated useful life of the assets using the straight-line method. Fully amortized intangible assets are retired at the end of their economic useful life.
We first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If, based on a review of qualitative factors, it is more likely than not that the fair value of a reporting unit is less than its carrying value, we perform a quantitative analysis. If the quantitative analysis indicates the carrying value of a reporting unit exceeds its fair value, we measure any goodwill impairment losses as the amount by which the carrying amount of a reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to that reporting unit. See additional discussion in note 6.
LEASES – Operating lease right-of-use (ROU) assets represent our right to use an underlying asset for the lease term and operating lease liabilities represent our obligation to make lease payments arising from the lease. The majority of our lease portfolio consists of retail office space in the U.S., Canada, and Australia. The contract terms for these retail offices generally are from May 1 to April 30, and generally run two to five years.
We record operating lease ROU assets and operating lease liabilities based on the discounted future minimum lease payments over the term of the lease. We generally do not include renewal options in the term of the lease. As the rates implicit in our leases are not readily determinable, we use our incremental borrowing rate based on the lease term and geographic location in calculating the discounted future minimum lease payments.
We recognize lease expenses for our operating leases on a straight-line basis. For lease payments that are subject to adjustments based on indexes or rates, the most current index or rate adjustments were included in the measurement of our ROU assets and lease liabilities at commencement of the lease. Variable lease costs, including non-lease components (such as common area maintenance, utilities, insurance, and taxes) and certain index-based changes in lease payments, are expensed as incurred. Our ROU assets are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.
FOREIGN CURRENCY – The financial statements of the Company’s foreign operations are translated into U.S. dollars. Assets and liabilities are translated at current exchange rates as of the balance sheet date, equity accounts at historical exchange rates, while income statement accounts are translated at the average rates in effect during the year. Translation adjustments are not included in net income, but are recorded as a separate component of other comprehensive income in stockholders' equity. Foreign currency gains and losses included in operating results for fiscal years 2025, 2024 and 2023 were not material.
TREASURY SHARES – We record shares of common stock repurchased by us as treasury shares, at cost, resulting in a reduction of stockholders' equity. Periodically, we may retire shares held in treasury as determined by our Board of Directors. We typically reissue treasury shares as part of our stock-based compensation programs. When shares are reissued, we determine the cost using the average cost method.
FAIR VALUE MEASUREMENT – We use the following classification of financial instruments pursuant to the fair value hierarchy methodologies for assets measured at fair value:
▪Level 1 – inputs to the valuation are quoted prices in an active market for identical assets.
▪Level 2 – inputs to the valuation include quoted prices for similar assets in active markets utilizing a third-party pricing service to determine fair value.
▪Level 3 – valuation is based on significant inputs that are unobservable in the market and our own estimates of assumptions that we believe market participants would use in pricing the asset.
Assets measured on a recurring basis are initially measured at fair value and are required to be remeasured at fair value in the financial statements at each reporting date.
Fair value estimates, methods and assumptions are set forth below. The fair value was not estimated for assets and liabilities that are not considered financial instruments.
▪Cash and cash equivalents, including restricted – Fair value approximates the carrying amount (Level 1).
▪Receivables, net – short-term – For short-term balances the carrying values reported in the balance sheet approximate fair market value due to the relative short-term nature of the respective instruments (Level 1).
▪Receivables, net – long-term – The carrying values for the long-term portion of loans to franchisees approximate fair market value due to variable interest rates, low historical delinquency rates and franchise territories serving as collateral (Level 1). Long-term EA, Refund Transfer (RT) and Instant Refund receivables are carried at net realizable value which approximates fair value (Level 3). Net realizable value is determined based on historical and projected collection rates.
▪Long-term debt – The fair value of our Senior Notes is based on quotes from multiple banks (Level 2). See note 7 for fair value.
▪Contingent consideration – Fair value approximates the carrying amount (Level 3). See note 10 for the carrying amount.
REVENUE RECOGNITION – Revenue is recognized when a contract has been established with a customer and when we satisfy the performance obligations by the transfer of a service or product to the customer. Revenue is the amount of consideration we expect to receive for our services and products and excludes sales taxes. The majority of our services and products have multiple performance obligations. We have certain services for which, the various performance obligations are generally provided simultaneously at a point in time, and revenue is recognized at that time. We have certain services and products where we have multiple performance obligations that are provided at various points in time. For these services and products, we allocate the transaction price to the various performance obligations based on relative standalone selling prices and recognize the revenue when the respective performance obligations have been satisfied. We have determined that our contracts do not contain a significant financing component.
Service revenues consist of assisted and online tax preparation revenues, fees for electronic filing, revenues from RTs, Emerald Card®, SpruceSM, Peace of Mind® (POM), Tax Identity Shield® (TIS) and Wave.
Assisted tax preparation. Services include tax preparation and electronic filing or printing of the completed tax return. Revenues from tax preparation and printing for clients that choose to print and mail their returns, are recognized when a completed return is accepted by the customer. Revenues for electronic filing are recognized when the return is electronically filed.
Royalties. Revenues are based on contractual percentages of franchise gross receipts and are generally recorded in the period in which the services are provided by the franchisee to the customer.
DIY tax preparation. Revenues include fees for online and desktop tax preparation software and for electronic filing or printing. Revenues for online software and printing for clients that choose to print and mail their returns, are recognized when the customer uses the software to complete a return. Revenues for desktop software are recognized when the software is sold to the end user. Revenues for electronic filing are recognized when the return is electronically filed.
Refund Transfer. Revenues are recognized when the Internal Revenue Service (IRS) filing acknowledgment is received and the bank account is established at our bank partner, PathwardTM, N.A. (Pathward), a wholly-owned subsidiary of Pathward Financial, Inc.
Emerald Card® and SpruceSM. Revenues consist of interchange income from the use of debit cards and fees paid by cardholders. Interchange income is a fee paid by merchants to our bank partner through the card networks. Revenues associated with Emerald Card® and SpruceSM are recognized based on authorization of cardholder transactions.
Peace of Mind® Extended Service Plan. Revenues are initially deferred and recognized over the term of the plan, based on the historical pattern of actual claims paid, as claims paid represent the transfer of POM services to the customer. The plan is effective for the life of the tax return, which can be up to six years; however, the majority
of claims are incurred in years two and three after the sale of POM. POM has multiple performance obligations where we represent our clients if they are audited by a taxing authority, and assume the cost, subject to certain limits, of additional taxes owed by a client resulting from errors attributable to H&R Block. Incremental wages are also deferred and recognized over the term of the plan, in conjunction with the revenues earned.
Tax Identity Shield®. Revenues are initially deferred and are recognized as the various services are provided to the client, either by us or a third party, throughout the term of the contract, which generally ends on April 30th of the following year. TIS has multiple performance obligations where we provide clients assistance in helping protect their tax identity and access to services to help restore their tax identity, if necessary. Protection services include a daily scan of the dark web for personal information, a monthly scan for the client's social security number in credit header data, notifying clients if their information is detected on a tax return filed through H&R Block, and obtaining additional IRS identity protections when eligible.
Interest and fee income on Emerald Advance®. Interest income is recorded over the life of the loan and late fees are recorded when the loan becomes 15 days past due.
Wave®. Revenues primarily consist of fees received to process payment transactions and are generally calculated as a percentage of the transaction amounts processed. Revenues are recognized upon authorization of the transaction.
MARKETING AND ADVERTISING – Marketing and advertising costs are expensed as used and totaled $285.8 million, $277.7 million and $286.3 million in fiscal years 2025, 2024 and 2023, respectively.
EMPLOYEE BENEFIT PLANS – We have a 401(k) defined contribution plan in the U.S., and similar plans internationally, covering eligible full-time and seasonal employees following the completion of an eligibility period. Employer contributions to these plans are discretionary and totaled $28.9 million, $25.7 million and $25.6 million for continuing operations in fiscal years 2025, 2024 and 2023, respectively.
We have severance plans covering executives and eligible regular full-time or part-time active employees who incur a qualifying termination. Expenses related to severance benefits for continuing operations totaled $8.4 million, $2.6 million and $6.9 million in
PRINCIPLES OF CONSOLIDATION – The consolidated financial statements include the accounts of the Company and our subsidiaries. Intercompany transactions and balances have been eliminated.
DISCONTINUED OPERATIONS – Our discontinued operations include the results of operations of Sand Canyon Corporation, previously known as Option One Mortgage Corporation, which exited its mortgage business in fiscal year 2008.
MANAGEMENT ESTIMATES – The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates, assumptions and judgments are applied in the evaluation of contingent losses associated with pending claims and litigation, reserves for uncertain tax positions, and fair value of reporting units. Estimates have been prepared based on the best information available as of each balance sheet date. As such, actual results could differ materially from those estimates.
CASH AND CASH EQUIVALENTS – All non-restricted highly liquid instruments maturing within three months at acquisition are considered to be cash equivalents. 2400000 2800000
CASH AND CASH EQUIVALENTS – RESTRICTED – Cash and cash equivalents – restricted consists primarily of cash held by our captive insurance subsidiary that is expected to be used to pay claims.
RECEIVABLES AND RELATED ALLOWANCES – Our trade receivables consist primarily of accounts receivable from tax clients for tax return preparation and related fees. The allowance for credit losses for these receivables requires management's judgment regarding collectibility and current economic conditions to establish an amount considered by management to be adequate to cover estimated losses as of the balance sheet date. Losses from tax clients for tax return preparation and related fees are not specifically identified and charged off; instead they are evaluated on a pooled basis. At the end of the fiscal year the outstanding balances on these receivables are evaluated based on collections received and expected collections over subsequent years. We establish an allowance for credit losses at an amount that we believe reflects the receivable at net realizable value. Typically in December of each year we charge-off the receivables to an amount we believe represents the net realizable value.
Our financing receivables consist primarily of participations in H&R Block Emerald Advance® (EA) term loans, loans made to franchisees, and amounts due under H&R Block's Instant Refund® (Instant Refund).
PROPERTY AND EQUIPMENT – Buildings, equipment and leasehold improvements are initially recorded at cost and are depreciated over the estimated useful life of the assets using the straight-line method. Estimated useful lives are generally 15 to 40 years for buildings, two to five years for computers and other equipment, three to five
years for purchased software and up to eight years for leasehold improvements. Property and equipment is retired when no longer in use.
P15Y P40Y P5Y P5Y P8Y
GOODWILL AND INTANGIBLE ASSETS – Goodwill represents costs in excess of fair values assigned to the underlying net assets of acquired businesses. Goodwill is not amortized, but rather is tested for impairment annually as of February 1, or more frequently if indications of potential impairment exist.
Intangible assets, including internally-developed software, with finite lives are amortized over their estimated useful lives and are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Intangible assets are typically amortized over the estimated useful life of the assets using the straight-line method. Fully amortized intangible assets are retired at the end of their economic useful life.
We first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If, based on a review of qualitative factors, it is more likely than not that the fair value of a reporting unit is less than its carrying value, we perform a quantitative analysis. If the quantitative analysis indicates the carrying value of a reporting unit exceeds its fair value, we measure any goodwill impairment losses as the amount by which the carrying amount of a reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to that reporting unit. See additional discussion in note 6.
LEASES – Operating lease right-of-use (ROU) assets represent our right to use an underlying asset for the lease term and operating lease liabilities represent our obligation to make lease payments arising from the lease. The majority of our lease portfolio consists of retail office space in the U.S., Canada, and Australia. The contract terms for these retail offices generally are from May 1 to April 30, and generally run two to five years.
We record operating lease ROU assets and operating lease liabilities based on the discounted future minimum lease payments over the term of the lease. We generally do not include renewal options in the term of the lease. As the rates implicit in our leases are not readily determinable, we use our incremental borrowing rate based on the lease term and geographic location in calculating the discounted future minimum lease payments.
We recognize lease expenses for our operating leases on a straight-line basis. For lease payments that are subject to adjustments based on indexes or rates, the most current index or rate adjustments were included in the measurement of our ROU assets and lease liabilities at commencement of the lease. Variable lease costs, including non-lease components (such as common area maintenance, utilities, insurance, and taxes) and certain index-based changes in lease payments, are expensed as incurred. Our ROU assets are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.
P5Y FOREIGN CURRENCY – The financial statements of the Company’s foreign operations are translated into U.S. dollars. Assets and liabilities are translated at current exchange rates as of the balance sheet date, equity accounts at historical exchange rates, while income statement accounts are translated at the average rates in effect during the year. Translation adjustments are not included in net income, but are recorded as a separate component of other comprehensive income in stockholders' equity.
TREASURY SHARES – We record shares of common stock repurchased by us as treasury shares, at cost, resulting in a reduction of stockholders' equity. Periodically, we may retire shares held in treasury as determined by our Board of Directors. We typically reissue treasury shares as part of our stock-based compensation programs. When shares are reissued, we determine the cost using the average cost method.
FAIR VALUE MEASUREMENT – We use the following classification of financial instruments pursuant to the fair value hierarchy methodologies for assets measured at fair value:
▪Level 1 – inputs to the valuation are quoted prices in an active market for identical assets.
▪Level 2 – inputs to the valuation include quoted prices for similar assets in active markets utilizing a third-party pricing service to determine fair value.
▪Level 3 – valuation is based on significant inputs that are unobservable in the market and our own estimates of assumptions that we believe market participants would use in pricing the asset.
Assets measured on a recurring basis are initially measured at fair value and are required to be remeasured at fair value in the financial statements at each reporting date.
Fair value estimates, methods and assumptions are set forth below. The fair value was not estimated for assets and liabilities that are not considered financial instruments.
▪Cash and cash equivalents, including restricted – Fair value approximates the carrying amount (Level 1).
▪Receivables, net – short-term – For short-term balances the carrying values reported in the balance sheet approximate fair market value due to the relative short-term nature of the respective instruments (Level 1).
▪Receivables, net – long-term – The carrying values for the long-term portion of loans to franchisees approximate fair market value due to variable interest rates, low historical delinquency rates and franchise territories serving as collateral (Level 1). Long-term EA, Refund Transfer (RT) and Instant Refund receivables are carried at net realizable value which approximates fair value (Level 3). Net realizable value is determined based on historical and projected collection rates.
▪Long-term debt – The fair value of our Senior Notes is based on quotes from multiple banks (Level 2). See note 7 for fair value.
▪Contingent consideration – Fair value approximates the carrying amount (Level 3). See note 10 for the carrying amount.
REVENUE RECOGNITION – Revenue is recognized when a contract has been established with a customer and when we satisfy the performance obligations by the transfer of a service or product to the customer. Revenue is the amount of consideration we expect to receive for our services and products and excludes sales taxes. The majority of our services and products have multiple performance obligations. We have certain services for which, the various performance obligations are generally provided simultaneously at a point in time, and revenue is recognized at that time. We have certain services and products where we have multiple performance obligations that are provided at various points in time. For these services and products, we allocate the transaction price to the various performance obligations based on relative standalone selling prices and recognize the revenue when the respective performance obligations have been satisfied. We have determined that our contracts do not contain a significant financing component.
Service revenues consist of assisted and online tax preparation revenues, fees for electronic filing, revenues from RTs, Emerald Card®, SpruceSM, Peace of Mind® (POM), Tax Identity Shield® (TIS) and Wave.
Assisted tax preparation. Services include tax preparation and electronic filing or printing of the completed tax return. Revenues from tax preparation and printing for clients that choose to print and mail their returns, are recognized when a completed return is accepted by the customer. Revenues for electronic filing are recognized when the return is electronically filed.
Royalties. Revenues are based on contractual percentages of franchise gross receipts and are generally recorded in the period in which the services are provided by the franchisee to the customer.
DIY tax preparation. Revenues include fees for online and desktop tax preparation software and for electronic filing or printing. Revenues for online software and printing for clients that choose to print and mail their returns, are recognized when the customer uses the software to complete a return. Revenues for desktop software are recognized when the software is sold to the end user. Revenues for electronic filing are recognized when the return is electronically filed.
Refund Transfer. Revenues are recognized when the Internal Revenue Service (IRS) filing acknowledgment is received and the bank account is established at our bank partner, PathwardTM, N.A. (Pathward), a wholly-owned subsidiary of Pathward Financial, Inc.
Emerald Card® and SpruceSM. Revenues consist of interchange income from the use of debit cards and fees paid by cardholders. Interchange income is a fee paid by merchants to our bank partner through the card networks. Revenues associated with Emerald Card® and SpruceSM are recognized based on authorization of cardholder transactions.
Peace of Mind® Extended Service Plan. Revenues are initially deferred and recognized over the term of the plan, based on the historical pattern of actual claims paid, as claims paid represent the transfer of POM services to the customer. The plan is effective for the life of the tax return, which can be up to six years; however, the majority
of claims are incurred in years two and three after the sale of POM. POM has multiple performance obligations where we represent our clients if they are audited by a taxing authority, and assume the cost, subject to certain limits, of additional taxes owed by a client resulting from errors attributable to H&R Block. Incremental wages are also deferred and recognized over the term of the plan, in conjunction with the revenues earned.
Tax Identity Shield®. Revenues are initially deferred and are recognized as the various services are provided to the client, either by us or a third party, throughout the term of the contract, which generally ends on April 30th of the following year. TIS has multiple performance obligations where we provide clients assistance in helping protect their tax identity and access to services to help restore their tax identity, if necessary. Protection services include a daily scan of the dark web for personal information, a monthly scan for the client's social security number in credit header data, notifying clients if their information is detected on a tax return filed through H&R Block, and obtaining additional IRS identity protections when eligible.
Interest and fee income on Emerald Advance®. Interest income is recorded over the life of the loan and late fees are recorded when the loan becomes 15 days past due.
Wave®. Revenues primarily consist of fees received to process payment transactions and are generally calculated as a percentage of the transaction amounts processed. Revenues are recognized upon authorization of the transaction.
MARKETING AND ADVERTISING – Marketing and advertising costs are expensed as used and 285800000 277700000 286300000
EMPLOYEE BENEFIT PLANS – We have a 401(k) defined contribution plan in the U.S., and similar plans internationally, covering eligible full-time and seasonal employees following the completion of an eligibility period. Employer contributions to these plans are discretionary and totaled $28.9 million, $25.7 million and $25.6 million for continuing operations in fiscal years 2025, 2024 and 2023, respectively.
We have severance plans covering executives and eligible regular full-time or part-time active employees who incur a qualifying termination. 28900000 25700000 25600000 8400000 2600000 6900000
NOTE 2: REVENUE RECOGNITION
The majority of our revenues are from our U.S. tax services business. The following table disaggregates our U.S. revenues by major service line, with revenues from our international tax services businesses and from Wave included as separate lines:
(in 000s)
Year ended June 30,202520242023
Revenues:
U.S. assisted tax preparation$2,413,229 $2,274,835 $2,167,138 
U.S. royalties192,877 204,802 210,631 
U.S. DIY tax preparation383,738 349,812 314,758 
Refund Transfers137,526 142,249 143,310 
Peace of Mind® Extended Service Plan87,326 93,087 95,181 
Tax Identity Shield®29,920 33,386 38,265 
Emerald Card® and SpruceSM
72,888 76,093 84,651 
Interest and fee income on Emerald Advance®28,958 40,933 47,554 
International 246,993 247,123 235,131 
Wave109,222 96,472 90,314 
Other58,318 51,555 45,252 
Total revenues$3,760,995 $3,610,347 $3,472,185 
Changes in the balances of deferred revenue and wages for POM are as follows:
(in 000s)
POMDeferred RevenueDeferred Wages
Year ended June 30, 2025202420252024
Balance, beginning of the year$156,610 $167,257 $20,212 $21,828 
Amounts deferred94,888 97,125 12,755 11,819 
Amounts recognized on previous deferrals(102,196)(107,772)(13,083)(13,435)
Balance, end of the year$149,302 $156,610 $19,884 $20,212 
As of June 30, 2025, deferred revenue related to POM was $149.3 million. We expect that $87.4 million will be recognized over the next twelve months, while the remaining balance will be recognized over the following five years. POM deferred revenues are included in deferred revenue and other liabilities in the consolidated balance sheets. POM deferred wages are included in prepaid expenses and other current assets and other noncurrent assets.
As of June 30, 2025 and 2024, TIS deferred revenue was $22.6 million and $21.4 million, respectively. The related liabilities are included in deferred revenue and other current liabilities in the consolidated balance sheets. All deferred revenue related to TIS as of June 30, 2025 will be recognized by April 2026.
A significant portion of our accounts receivable balances arise from services and products that we provide to our customers, with the exception of those related to EAs which arise from purchased participation interests with our bank partner. The majority of our receivables are related to RTs. Generally the prices of our services and products are fixed and determinable at the time of sale. For RTs, we record a receivable for our fees which is then collected at the time the IRS issues the client’s refund. Our receivables from customers are generally collected on a periodic basis during and subsequent to the tax season. See note 4 for our accounts receivable balances.
The following table disaggregates our U.S. revenues by major service line, with revenues from our international tax services businesses and from Wave included as separate lines:
(in 000s)
Year ended June 30,202520242023
Revenues:
U.S. assisted tax preparation$2,413,229 $2,274,835 $2,167,138 
U.S. royalties192,877 204,802 210,631 
U.S. DIY tax preparation383,738 349,812 314,758 
Refund Transfers137,526 142,249 143,310 
Peace of Mind® Extended Service Plan87,326 93,087 95,181 
Tax Identity Shield®29,920 33,386 38,265 
Emerald Card® and SpruceSM
72,888 76,093 84,651 
Interest and fee income on Emerald Advance®28,958 40,933 47,554 
International 246,993 247,123 235,131 
Wave109,222 96,472 90,314 
Other58,318 51,555 45,252 
Total revenues$3,760,995 $3,610,347 $3,472,185 
2413229000 2274835000 192877000 204802000 383738000 349812000 137526000 142249000 87326000 93087000 29920000 33386000 72888000 76093000 28958000 40933000 246993000 247123000 109222000 96472000 58318000 51555000 3760995000 3610347000
Changes in the balances of deferred revenue and wages for POM are as follows:
(in 000s)
POMDeferred RevenueDeferred Wages
Year ended June 30, 2025202420252024
Balance, beginning of the year$156,610 $167,257 $20,212 $21,828 
Amounts deferred94,888 97,125 12,755 11,819 
Amounts recognized on previous deferrals(102,196)(107,772)(13,083)(13,435)
Balance, end of the year$149,302 $156,610 $19,884 $20,212 
156610000 167257000 20212000 21828000 94888000 97125000 12755000 11819000 102196000 107772000 13083000 13435000 149302000 156610000 19884000 20212000 149300000 87400000 P5Y 22600000 21400000 2026
NOTE 3: EARNINGS PER SHARE
Basic and diluted earnings per share is computed using the two-class method. The two-class method is an earnings allocation formula that determines net income per share for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. Per share amounts are computed by dividing net income from continuing operations attributable to common shareholders by the weighted average shares outstanding during each period.
The computations of basic and diluted earnings per share from continuing operations are as follows:
(in 000s, except per share amounts)
Year ended June 30,202520242023
Net income from continuing operations attributable to shareholders$609,450 $597,963 $561,800 
Amounts allocated to participating securities (2,771)(2,390)(2,272)
Net income from continuing operations attributable to common shareholders$606,679 $595,573 $559,528 
Basic weighted average common shares135,629 141,932 154,044 
Potential dilutive shares1,711 1,958 3,204 
Dilutive weighted average common shares137,340 143,890 157,248 
Earnings per share from continuing operations attributable to common shareholders:
Basic$4.47 $4.20 $3.63 
Diluted4.42 4.14 3.56 
Diluted earnings per share excludes the impact of shares of common stock issuable upon the lapse of certain restrictions or the exercise of options to purchase 0.3 million, 0.1 million and 0.6 million shares of stock for fiscal years 2025, 2024 and 2023, respectively, as the effect would be antidilutive.
The computations of basic and diluted earnings per share from continuing operations are as follows:
(in 000s, except per share amounts)
Year ended June 30,202520242023
Net income from continuing operations attributable to shareholders$609,450 $597,963 $561,800 
Amounts allocated to participating securities (2,771)(2,390)(2,272)
Net income from continuing operations attributable to common shareholders$606,679 $595,573 $559,528 
Basic weighted average common shares135,629 141,932 154,044 
Potential dilutive shares1,711 1,958 3,204 
Dilutive weighted average common shares137,340 143,890 157,248 
Earnings per share from continuing operations attributable to common shareholders:
Basic$4.47 $4.20 $3.63 
Diluted4.42 4.14 3.56 
609450000 597963000 561800000 2771000 2390000 2272000 606679000 595573000 559528000 135629000 141932000 154044000 1711000 1958000 3204000 137340000 143890000 157248000 4.47 4.20 3.63 4.42 4.14 3.56 300000 100000 600000
NOTE 4: RECEIVABLES
Receivables, net of their related allowance, consist of the following:
(in 000s)
As ofJune 30, 2025June 30, 2024
Short-termLong-termShort-termLong-term
Loans to franchisees$7,386 $16,402 $5,917 $16,498 
Receivables for U.S. assisted and DIY tax preparation and related fees15,896 6,361 18,440 5,332 
H&R Block's Instant Refund® receivables
2,243 939 2,947 207 
Emerald Advance®
13,899 22,816 17,867 21,360 
Software receivables from retailers2,582 — 1,029 — 
Royalties and other receivables from franchisees4,414 — 5,808 — 
Wave payment processing receivables1,533 — 1,078 — 
Other15,668 498 15,989 427 
$63,621 $47,016 $69,075 $43,824 
Balances presented above as short-term are included in receivables, while the long-term portions are included in other noncurrent assets in the consolidated balance sheets.
Loans to Franchisees. Franchisee loan balances consist of term loans made primarily to finance the purchase of franchises and short-term lines of credit primarily for the purpose of funding seasonal working capital needs. Loans with a principal balance more than 90 days past due or on non-accrual status were $3.1 million and $1.1 million as of June 30, 2025 and June 30, 2024, respectively.
The credit quality of these receivables is assessed at origination at an individual franchisee level. Payment history is monitored on a regular basis. Based upon our internal analysis and underwriting activities, we believe all loans to franchisees are of similar credit quality. Loans are evaluated for collectibility when they become delinquent or more than 90 days past due. Amounts deemed to be uncollectible are written off to bad debt expense and bad debt related to these loans has typically been immaterial. Additionally, the franchise territory serves as additional protection in the event a franchisee defaults on the loan, as we may revoke franchise rights, write off the remaining balance of the loan and refranchise the territory or begin operating it as company-owned.
H&R Block's Instant Refund®. Our Canadian operations advance refunds due to certain clients from the Canada Revenue Agency (CRA), in exchange for a fee. The total fee we charge for this service is mandated by legislation which is administered by the CRA. The client assigns to us the full amount of the tax refund to be issued by the CRA and the refund is then sent by the CRA directly to us. The amount we advance to clients under this program is the amount of their estimated refund, less our fees, any amounts expected to be withheld by the CRA for amounts the client may owe to government authorities and any amounts owed to us from prior years. The CRA system for tracking amounts due to various government agencies also indicates if the client has already filed a return, does not exist in CRA records, or is bankrupt. This serves to greatly reduce the amounts of uncollectible receivables and the risk of fraudulent returns. H&R Block's Instant Refund® amounts are generally received from the CRA within 60 days of filing the client's return, with the remaining balance collectible from the client.
Credit losses from these receivables are not specifically identified and charged off; instead we review the credit quality of these receivables on a pooled basis, segregated by the tax return year of origination with older years being deemed more unlikely to be repaid. At the end of the fiscal year, the outstanding balances on these receivables are evaluated based on collections received and expected collections over subsequent tax seasons. We establish an allowance for credit losses at an amount that we believe reflects the receivable at net realizable value. In December of each year we charge-off the receivables to an amount we believe represents the net realizable value.
Balances and amounts on non-accrual status, classified as impaired, or more than 60 days past due, by tax return year of origination, as of June 30, 2025 are as follows:
(in 000s)
Tax return year of originationBalanceMore Than 60 Days Past Due
2024$3,451 $3,254 
2023 and prior819 819 
4,270 $4,073 
Allowance(1,088)
Net balance$3,182 
H&R Block Emerald Advance®. EA term loans are offered by our bank partner to clients, in November and December, in amounts of $350 to $1,300. EA term loans are interest bearing with principal and interest due in full on March 31, late fees assessed as of April 14, and any amounts unpaid are placed on non-accrual status as of April 30. We purchase participation interests in their loans, as discussed further in note 10.
Credit losses from EAs are not specifically identified and charged off; instead we review the credit quality of our purchased participation interest in EA receivables on a pooled basis, which are segregated by the fiscal year of origination with older years being deemed more unlikely to be repaid. At the end of the fiscal year, the outstanding balances on these receivables are evaluated based on collections received and expected collections over subsequent years. We establish an allowance for credit losses at an amount that we believe reflects the receivable at net realizable value. In December of each year, we charge-off the receivables and the related allowance for EA term loans to an amount we believe represents the net realizable value.
Balances and amounts on non-accrual status, classified as impaired, or more than 60 days past due, by fiscal year of origination as of June 30, 2025, are as follows:
(in 000s)
Fiscal year of originationBalanceNon-Accrual
2025$33,723 $33,723 
2024 and prior22,655 22,655 
56,378 $56,378 
Allowance(19,663)
Net balance$36,715 
Allowance for Credit Losses. Activity in the allowance for credit losses for EAs and all other short-term and long-term receivables for the years ended June 30, 2025, 2024 and 2023 is as follows:
(in 000s)
EAsAll OtherTotal
Balances as of July 1, 2022$26,141 $51,126 $77,267 
Provision for credit losses16,059 36,231 52,290 
Charge-offs, recoveries and other(14,814)(52,249)(67,063)
Balances as of June 30, 202327,386 35,108 62,494 
Provision for credit losses33,864 48,703 82,567 
Charge-offs, recoveries and other(27,714)(38,484)(66,198)
Balances as of June 30, 202433,536 45,327 78,863 
Provision for credit losses19,663 45,528 65,191 
Charge-offs, recoveries and other(33,536)(45,699)(79,235)
Balances as of June 30, 2025$19,663 $45,156 $64,819 
Receivables, net of their related allowance, consist of the following:
(in 000s)
As ofJune 30, 2025June 30, 2024
Short-termLong-termShort-termLong-term
Loans to franchisees$7,386 $16,402 $5,917 $16,498 
Receivables for U.S. assisted and DIY tax preparation and related fees15,896 6,361 18,440 5,332 
H&R Block's Instant Refund® receivables
2,243 939 2,947 207 
Emerald Advance®
13,899 22,816 17,867 21,360 
Software receivables from retailers2,582 — 1,029 — 
Royalties and other receivables from franchisees4,414 — 5,808 — 
Wave payment processing receivables1,533 — 1,078 — 
Other15,668 498 15,989 427 
$63,621 $47,016 $69,075 $43,824 
7386000 16402000 5917000 16498000 15896000 6361000 18440000 5332000 2243000 939000 2947000 207000 13899000 22816000 17867000 21360000 2582000 0 1029000 0 4414000 0 5808000 0 1533000 0 1078000 0 15668000 498000 15989000 427000 63621000 47016000 69075000 43824000 P90D P60D alances and amounts on non-accrual status, classified as impaired, or more than 60 days past due, by tax return year of origination, as of June 30, 2025 are as follows:
(in 000s)
Tax return year of originationBalanceMore Than 60 Days Past Due
2024$3,451 $3,254 
2023 and prior819 819 
4,270 $4,073 
Allowance(1,088)
Net balance$3,182 
alances and amounts on non-accrual status, classified as impaired, or more than 60 days past due, by fiscal year of origination as of June 30, 2025, are as follows:
(in 000s)
Fiscal year of originationBalanceNon-Accrual
2025$33,723 $33,723 
2024 and prior22,655 22,655 
56,378 $56,378 
Allowance(19,663)
Net balance$36,715 
P60D 3451000 3254000 819000 819000 4270000 4073000 1088000 3182000 P60D 33723000 33723000 22655000 22655000 56378000 56378000 19663000 36715000 Activity in the allowance for credit losses for EAs and all other short-term and long-term receivables for the years ended June 30, 2025, 2024 and 2023 is as follows:
(in 000s)
EAsAll OtherTotal
Balances as of July 1, 2022$26,141 $51,126 $77,267 
Provision for credit losses16,059 36,231 52,290 
Charge-offs, recoveries and other(14,814)(52,249)(67,063)
Balances as of June 30, 202327,386 35,108 62,494 
Provision for credit losses33,864 48,703 82,567 
Charge-offs, recoveries and other(27,714)(38,484)(66,198)
Balances as of June 30, 202433,536 45,327 78,863 
Provision for credit losses19,663 45,528 65,191 
Charge-offs, recoveries and other(33,536)(45,699)(79,235)
Balances as of June 30, 2025$19,663 $45,156 $64,819 
26141000 51126000 77267000 16059000 36231000 52290000 14814000 52249000 67063000 27386000 35108000 62494000 33864000 48703000 82567000 27714000 38484000 66198000 33536000 45327000 78863000 19663000 45528000 65191000 33536000 45699000 79235000 19663000 45156000 64819000
NOTE 5: PROPERTY AND EQUIPMENT
The components of property and equipment, net of accumulated depreciation and amortization, are as follows:
(in 000s)
As ofJune 30, 2025June 30, 2024
Buildings$12,919 $23,200 
Computers and other equipment54,853 46,880 
Leasehold improvements66,758 59,553 
Purchased software151 247 
Land and other non-depreciable assets387 1,439 
$135,068 $131,319 
Depreciation expense of property and equipment from continuing operations for fiscal years 2025, 2024 and 2023 was $69.1 million, $60.7 million and $58.5 million, respectively.
The carrying value of long-lived assets held outside the U.S., which is comprised of property and equipment, totaled $20.9 million and $20.0 million as of June 30, 2025 and 2024 respectively.
The components of property and equipment, net of accumulated depreciation and amortization, are as follows:
(in 000s)
As ofJune 30, 2025June 30, 2024
Buildings$12,919 $23,200 
Computers and other equipment54,853 46,880 
Leasehold improvements66,758 59,553 
Purchased software151 247 
Land and other non-depreciable assets387 1,439 
$135,068 $131,319 
12919000 23200000 54853000 46880000 66758000 59553000 151000 247000 387000 1439000 135068000 131319000 69100000 60700000 58500000 20900000 20000000.0
NOTE 6: GOODWILL AND INTANGIBLE ASSETS
Changes in the carrying amount of goodwill for the periods ended June 30, 2025 and 2024 are as follows:
(in 000s)
GoodwillAccumulated Impairment LossesNet
Balances as of July 1, 2023$913,750 $(138,297)$775,453 
Acquisitions(1)
19,086 — 19,086 
Disposals and foreign currency changes, net(9,313)— (9,313)
Impairments— — — 
Balances as of June 30, 2024923,523 (138,297)785,226 
Acquisitions(1)
15,579 — 15,579 
Disposals and foreign currency changes, net1,248 — 1,248 
Impairments— — — 
Balances as of June 30, 2025$940,350 $(138,297)$802,053 
(1) All goodwill added during the period is expected to be tax-deductible for federal income tax reporting.
We test goodwill for impairment annually as of February 1, or more frequently if events occur or circumstances change which would, more likely than not, reduce the fair value of a reporting unit below its carrying value.
Components of intangible assets are as follows:
(in 000s)
Gross
Carrying
Amount		Accumulated
Amortization		Net
June 30, 2025:
Reacquired franchise rights$415,700 $(243,330)$172,370 
Customer relationships354,107 (287,067)67,040 
Internally-developed software119,959 (117,604)2,355 
Noncompete agreements23,070 (20,188)2,882 
Purchased technology68,100 (55,655)12,445 
Trade name5,800 (3,480)2,320 
$986,736 $(727,324)$259,412 
June 30, 2024:
Reacquired franchise rights$403,955 $(228,157)$175,798 
Customer relationships331,435 (270,245)61,190 
Internally-developed software122,673 (119,610)3,063 
Noncompete agreements21,977 (19,494)2,483 
Purchased technology70,100 (51,432)18,668 
Trade name5,800 (2,900)2,900 
$955,940 $(691,838)$264,102 
Amortization of intangible assets from continuing operations for the fiscal years ended June 30, 2025, 2024 and 2023 was $47.7 million, $61.1 million and $72.0 million, respectively. Estimated amortization of intangible assets for fiscal years 2026, 2027, 2028, 2029 and 2030 is $42.0 million, $35.3 million, $27.0 million, $18.4 million and $8.8 million, respectively.
We made payments to acquire businesses totaling $35.5 million, $43.4 million and $48.2 million during the fiscal years ended June 30, 2025, 2024 and 2023, respectively. The amounts and weighted-average lives of assets acquired during fiscal year 2025, including amounts capitalized related to internally-developed software, are as follows:
(dollars in 000s)
AmountWeighted-Average Life (in years)
Customer relationships$27,712 5
Reacquired franchise rights11,738 6
Internally-developed software2,305 3
Noncompete agreements1,259 5
Total$43,014 5
Changes in the carrying amount of goodwill for the periods ended June 30, 2025 and 2024 are as follows:
(in 000s)
GoodwillAccumulated Impairment LossesNet
Balances as of July 1, 2023$913,750 $(138,297)$775,453 
Acquisitions(1)
19,086 — 19,086 
Disposals and foreign currency changes, net(9,313)— (9,313)
Impairments— — — 
Balances as of June 30, 2024923,523 (138,297)785,226 
Acquisitions(1)
15,579 — 15,579 
Disposals and foreign currency changes, net1,248 — 1,248 
Impairments— — — 
Balances as of June 30, 2025$940,350 $(138,297)$802,053 
(1) All goodwill added during the period is expected to be tax-deductible for federal income tax reporting.
913750000 138297000 775453000 19086000 19086000 9313000 9313000 0 0 923523000 138297000 785226000 15579000 15579000 -1248000 -1248000 0 0 940350000 138297000 802053000
Components of intangible assets are as follows:
(in 000s)
Gross
Carrying
Amount		Accumulated
Amortization		Net
June 30, 2025:
Reacquired franchise rights$415,700 $(243,330)$172,370 
Customer relationships354,107 (287,067)67,040 
Internally-developed software119,959 (117,604)2,355 
Noncompete agreements23,070 (20,188)2,882 
Purchased technology68,100 (55,655)12,445 
Trade name5,800 (3,480)2,320 
$986,736 $(727,324)$259,412 
June 30, 2024:
Reacquired franchise rights$403,955 $(228,157)$175,798 
Customer relationships331,435 (270,245)61,190 
Internally-developed software122,673 (119,610)3,063 
Noncompete agreements21,977 (19,494)2,483 
Purchased technology70,100 (51,432)18,668 
Trade name5,800 (2,900)2,900 
$955,940 $(691,838)$264,102 
Components of intangible assets are as follows:
(in 000s)
Gross
Carrying
Amount		Accumulated
Amortization		Net
June 30, 2025:
Reacquired franchise rights$415,700 $(243,330)$172,370 
Customer relationships354,107 (287,067)67,040 
Internally-developed software119,959 (117,604)2,355 
Noncompete agreements23,070 (20,188)2,882 
Purchased technology68,100 (55,655)12,445 
Trade name5,800 (3,480)2,320 
$986,736 $(727,324)$259,412 
June 30, 2024:
Reacquired franchise rights$403,955 $(228,157)$175,798 
Customer relationships331,435 (270,245)61,190 
Internally-developed software122,673 (119,610)3,063 
Noncompete agreements21,977 (19,494)2,483 
Purchased technology70,100 (51,432)18,668 
Trade name5,800 (2,900)2,900 
$955,940 $(691,838)$264,102 
The amounts and weighted-average lives of assets acquired during fiscal year 2025, including amounts capitalized related to internally-developed software, are as follows:
(dollars in 000s)
AmountWeighted-Average Life (in years)
Customer relationships$27,712 5
Reacquired franchise rights11,738 6
Internally-developed software2,305 3
Noncompete agreements1,259 5
Total$43,014 5
415700000 243330000 172370000 354107000 287067000 67040000 119959000 117604000 2355000 23070000 20188000 2882000 68100000 55655000 12445000 5800000 3480000 2320000 986736000 727324000 259412000 403955000 228157000 175798000 331435000 270245000 61190000 122673000 119610000 3063000 21977000 19494000 2483000 70100000 51432000 18668000 5800000 2900000 2900000 955940000 691838000 264102000 47700000 61100000 72000000.0 2026 42000000.0 35300000 27000000.0 18400000 8800000 35500000 43400000 48200000 27712000 P5Y 11738000 P6Y 2305000 P3Y 1259000 P5Y 43014000 P5Y
NOTE 7: LONG-TERM DEBT
The components of long-term debt are as follows:
(in 000s)
As ofJune 30, 2025June 30, 2024
Senior Notes, 5.250%, due October 2025 (1)
$350,000 $350,000 
Senior Notes, 2.500%, due July 2028 (1)
500,000 500,000 
Senior Notes, 3.875%, due August 2030 (1)
650,000 650,000 
Debt issuance costs and discounts(6,802)(8,905)
Total long-term debt1,493,198 1,491,095 
Less: Current portion(349,893)— 
Long-term portion$1,143,305 $1,491,095 
Estimated fair value of long-term debt$1,437,000 $1,391,000 
(1)    The Senior Notes are not redeemable by the bondholders prior to maturity, although we have the right to redeem some or all of these notes at any time, at specified redemption prices. The interest rates on our Senior Notes are subject to adjustment based upon our credit ratings.
Our unsecured committed line of credit (CLOC) provides for an unsecured senior revolving credit facility in the aggregate principal amount of $1.5 billion, which includes a $175.0 million sublimit for swingline loans and a $50.0 million sublimit for standby letters of credit. We may request increases in the aggregate principal amount of the revolving credit facility of up to $500.0 million, subject to obtaining commitments from lenders and meeting certain other conditions. Our CLOC includes an annual facility fee, which will vary depending on our then current credit ratings and was scheduled to expire on June 11, 2026. On July 11, 2025, we entered into a Fifth Amended and Restated Credit and Guarantee Agreement, which amended and restated our existing CLOC, extended the maturity date to July 11, 2030, maintained the aggregate principal amount of $1.5 billion, and revised the interest rate table. Other material terms remain substantially unchanged from our existing CLOC.
The CLOC is subject to various conditions, triggers, events or occurrences that could result in earlier termination and contains customary representations, warranties, covenants and events of default, including, without limitation: (1) a covenant requiring the Company to maintain a debt-to-EBITDA ratio, as defined by the CLOC agreement, calculated on a consolidated basis of no greater than (a) 3.50 to 1.00 as of the last day of each fiscal quarter ending on March 31, June 30, and September 30 of each year and (b) 4.50 to 1.00 as of the last day of each fiscal quarter ending on December 31 of each year; (2) a covenant requiring us to maintain an interest coverage ratio (EBITDA-to-interest expense) calculated on a consolidated basis of not less than 2.50 to 1.00 as of the last date of any fiscal quarter; and (3) covenants restricting our ability to incur certain additional debt, incur liens, merge or consolidate with other companies, sell or dispose of assets (including equity interests), liquidate or dissolve, engage in certain transactions with affiliates or enter into certain restrictive agreements. The CLOC includes provisions for an equity cure which could potentially allow us to independently cure certain defaults. Proceeds under the CLOC may be used for working capital needs or for other general corporate purposes. We were in compliance with these requirements as of June 30, 2025.
We had no outstanding balance under our CLOC as of June 30, 2025 and amounts available to borrow were not limited by the debt-to-EBITDA covenant as of June 30, 2025.
OTHER INFORMATION – The aggregate payments required to retire long-term debt are $350.0 million in fiscal year 2026, $500.0 million in fiscal year 2029 and $650.0 million in fiscal year 2031.
The components of long-term debt are as follows:
(in 000s)
As ofJune 30, 2025June 30, 2024
Senior Notes, 5.250%, due October 2025 (1)
$350,000 $350,000 
Senior Notes, 2.500%, due July 2028 (1)
500,000 500,000 
Senior Notes, 3.875%, due August 2030 (1)
650,000 650,000 
Debt issuance costs and discounts(6,802)(8,905)
Total long-term debt1,493,198 1,491,095 
Less: Current portion(349,893)— 
Long-term portion$1,143,305 $1,491,095 
Estimated fair value of long-term debt$1,437,000 $1,391,000 
(1)    The Senior Notes are not redeemable by the bondholders prior to maturity, although we have the right to redeem some or all of these notes at any time, at specified redemption prices. The interest rates on our Senior Notes are subject to adjustment based upon our credit ratings.
0.05250 350000000 350000000 0.02500 500000000 500000000 0.03875 650000000 650000000 6802000 8905000 1493198000 1491095000 349893000 0 1143305000 1491095000 1437000000 1391000000 1500000000 175000000.0 50000000.0 500000000.0 3.50 4.50 2.50 350000000.0 500000000.0 650000000.0
NOTE 8: STOCK-BASED COMPENSATION
We have a stock-based Long Term Incentive Plan (Plan), under which we can grant stock options, restricted shares, performance-based share units, restricted share units, deferred stock units and other forms of equity to employees, non-employee directors and consultants. Stock-based compensation expense and related tax items are as follows:
(in 000s)
Year ended June 30,202520242023
Stock-based compensation expense$32,503 $34,277 $31,326 
Tax benefit11,621 11,567 7,386 
Realized tax benefit12,942 10,939 6,942 
As of June 30, 2025, we had 8.4 million shares reserved for future awards under our Plan. We issue treasury shares to satisfy the exercise or vesting of stock-based awards and believe we have adequate treasury shares available for future issuances.
We measure the fair value of restricted share units (other than performance-based share units) based on the closing price of our common stock on the grant date. We measure the fair value of performance-based share units based on the Monte Carlo valuation model, taking into account, as necessary, those provisions of the performance-based share units that are characterized as market conditions. We generally expense the grant-date fair value, net of estimated forfeitures, over the vesting period on a straight-line basis.
Options and restricted share units (other than performance-based share units) granted to employees typically vest pro-rata based upon service over a three-year period with a portion vesting each year. Performance-based share units granted to employees typically cliff vest at the end of a three-year period based upon satisfaction of both service-based and performance-based requirements. The number of performance-based share units that ultimately vest can range from zero up to 200 percent of the number granted, based on the form of the award, which can vary by year of grant. The performance metrics for these awards typically consist of earnings before interest, taxes, depreciation and amortization (EBITDA), total shareholder return or our stock price. Deferred stock units granted to non-employee directors vest when they are granted and are settled six months after the director separates from service as a director of the Company, except in the case of death.
All share units granted to employees and non-employee directors receive cumulative dividend equivalents to the extent of the units ultimately vesting at the time of distribution. Options granted under our Plan have a maximum contractual term of ten years.
A summary of restricted share units and deferred stock units, including those that are performance-based, for the year ended June 30, 2025, is as follows:
(shares in 000s)
Restricted Share Units and Deferred Stock Units
Performance-Based
Share Units
SharesWeighted-Average
Grant Date 
Fair Value		SharesWeighted-Average
Grant Date 
Fair Value
Outstanding, beginning of the year1,867 $33.31 1,021 $37.91 
Granted(1)
463 63.09 640 66.79 
Released(598)37.03 (863)27.97 
Forfeited(134)47.07 (106)48.02 
Outstanding, end of the year1,598 $39.10 692 $52.57 
(1)    Includes adjustments for performance achievement and dividend equivalents.
The total fair value of shares vesting during fiscal years 2025, 2024 and 2023 was $46.3 million, $39.1 million and $33.6 million, respectively. As of June 30, 2025, we had $41.3 million of total unrecognized compensation cost related to these shares. This cost is expected to be recognized over a weighted-average period of two years.
When valuing our performance-based share units on the grant date, we typically estimate the expected volatility using historical volatility for H&R Block, Inc. and selected comparable companies. The dividend yield is calculated based on the current dividend and the market price of our common stock on the grant date. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve in effect on the grant date. Both expected volatility and the risk-free interest rate are based on a period that approximates the expected term. The following assumptions were used to value performance-based share units using the Monte Carlo valuation model during the periods:
Year ended June 30,202520242023
Expected volatility
14.95% - 109.03%
10.17% - 157.11%
24.80% - 163.58%
Expected term3 years3 years3 years
Dividend yield (1)
0%
0%
0%
Risk-free interest rate
3.77%
4.54 %
 3.43%
Weighted-average fair value$67.09 $44.06$48.58 
(1)The valuation model assumes that dividends are reinvested by the Company on a continuous basis.
Stock-based compensation expense and related tax items are as follows:
(in 000s)
Year ended June 30,202520242023
Stock-based compensation expense$32,503 $34,277 $31,326 
Tax benefit11,621 11,567 7,386 
Realized tax benefit12,942 10,939 6,942 
32503000 34277000 31326000 11621000 11567000 7386000 12942000 10939000 6942000 8400000 P3Y P3Y 0 200 P10Y A summary of restricted share units and deferred stock units, including those that are performance-based, for the year ended June 30, 2025, is as follows:
(shares in 000s)
Restricted Share Units and Deferred Stock Units
Performance-Based
Share Units
SharesWeighted-Average
Grant Date 
Fair Value		SharesWeighted-Average
Grant Date 
Fair Value
Outstanding, beginning of the year1,867 $33.31 1,021 $37.91 
Granted(1)
463 63.09 640 66.79 
Released(598)37.03 (863)27.97 
Forfeited(134)47.07 (106)48.02 
Outstanding, end of the year1,598 $39.10 692 $52.57 
(1)    Includes adjustments for performance achievement and dividend equivalents.
1867000 33.31 1021000 37.91 463000 63.09 640000 66.79 598000 37.03 863000 27.97 134000 47.07 106000 48.02 1598000 39.10 692000 52.57 46300000 39100000 33600000 41300000 P2Y The following assumptions were used to value performance-based share units using the Monte Carlo valuation model during the periods:
Year ended June 30,202520242023
Expected volatility
14.95% - 109.03%
10.17% - 157.11%
24.80% - 163.58%
Expected term3 years3 years3 years
Dividend yield (1)
0%
0%
0%
Risk-free interest rate
3.77%
4.54 %
 3.43%
Weighted-average fair value$67.09 $44.06$48.58 
(1)The valuation model assumes that dividends are reinvested by the Company on a continuous basis.
0.1495 1.0903 0.2480 1.6358 P3Y P3Y P3Y 0 0 0 0.0377 0.0454 67.09 44.06 48.58
NOTE 9: INCOME TAXES
We file a consolidated federal income tax return in the U.S. with the IRS and file tax returns in various state, local, and foreign jurisdictions. Tax returns are typically examined and either settled upon completion of the examination or through the appeals process. With respect to federal, state and local jurisdictions and countries outside of the U.S., we are typically subject to examination for three to six years after the income tax returns have been filed. On November 7, 2022, the IRS commenced their examination of our 2020 tax return and related carryback claims to tax years 2015 through 2018. Our U.S. federal income tax returns for tax years 2021, 2019, and 2014 and prior are closed. Although the outcome of tax audits is always uncertain, we believe that adequate amounts of tax, interest, and penalties have been provided for in the accompanying consolidated financial statements for any adjustments that might be incurred due to federal, state, local or foreign audits.
The components of income from continuing operations upon which domestic and foreign income taxes have been provided are as follows:
(in 000s)
Year ended June 30,202520242023
Domestic$437,971 $489,912 $447,900 
Foreign343,432 272,410 263,312 
$781,403 $762,322 $711,212 
We operate in multiple income tax jurisdictions both within the U.S. and internationally. Accordingly, management must determine the appropriate allocation of income to each of these jurisdictions based on transfer pricing analyses of comparable companies and predictions of future economic conditions. Although these intercompany transactions reflect arm’s length terms and the proper transfer pricing documentation is in place, transfer pricing terms and conditions may be scrutinized by local tax authorities during an audit and any resulting changes may impact our mix of earnings in countries with differing statutory tax rates.
The reconciliation between the statutory U.S. federal tax rate and our effective tax rate from continuing operations is as follows:
Year ended June 30,202520242023
U.S. statutory tax rate21.0 %21.0 %21.0 %
Change in tax rate resulting from:
State income taxes, net of federal income tax benefit1.3 %1.4 %1.6 %
Earnings taxed in foreign jurisdictions(2.1)%(1.9)%(2.9)%
Permanent differences0.7 %0.7 %0.6 %
Uncertain tax positions1.9 %(0.4)%(0.9)%
U.S. tax on income from foreign affiliates1.7 %4.1 %3.1 %
Federal income tax credits(1.6)%(2.4)%(1.3)%
Foreign investment recapture— %2.6 %— %
Change in valuation allowance - domestic0.3 %— %(0.4)%
Change in valuation allowance - foreign— %(2.8)%0.7 %
Other(1.2)%(0.7)%(0.5)%
Effective tax rate22.0 %21.6 %21.0 %
The components of income tax expense for continuing operations are as follows:
(in 000s)
Year ended June 30,202520242023
Current:
Federal$143,298 $191,664 $97,430 
State30,716 9,695 19,023 
Foreign21,689 18,240 18,214 
195,703 219,599 134,667 
Deferred:
Federal(52,659)(59,441)23,367 
State(4,454)(11,749)1,860 
Foreign33,363 15,950 (10,482)
(23,750)(55,240)14,745 
Total income taxes for continuing operations$171,953 $164,359 $149,412 
In the United States, on July 4, 2025, H.R. 1 was signed into law. Among other provisions, the legislation reinstates immediate expensing for domestic research and experimental expenditures, extends 100% bonus depreciation for qualified property placed in service beginning January 20, 2025, and makes certain other provisions of the Tax Cuts and Jobs Act permanent. We are evaluating the impacts of this legislation and will reflect its impact in our financial statements in fiscal year 2026. At this time, we are unable to reasonably estimate the financial impact of these changes.
We account for income taxes under the asset and liability method, which requires us to record deferred income tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying value of existing assets and liabilities and their respective tax basis. Deferred taxes are determined separately for each tax-paying component within each tax jurisdiction based on provisions of enacted tax law. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.
We record a valuation allowance to reduce our deferred tax assets to the estimated amount that we believe is more likely than not to be realized. Determination of a valuation allowance for deferred tax assets requires that we make judgments about future matters that are not certain, including projections of future taxable income and evaluating potential tax-planning strategies.
The significant components of deferred tax assets and liabilities are reflected in the following table:
(in 000s)
As ofJune 30, 2025June 30, 2024
Deferred tax assets:
Deferred revenue33,435 50,944 
Allowance for credit losses30,098 30,581 
Deferred and stock-based compensation7,204 8,060 
Net operating loss carry-forward38,856 63,398 
Lease liabilities130,911 117,483 
Federal tax benefits related to state unrecognized tax benefits31,061 26,841 
Internally developed software84,301 15,063 
Intangibles - intellectual property61,138 71,367 
Other22,121 6,056 
Valuation allowance(18,538)(16,569)
Total deferred tax assets420,587 373,224 
Deferred tax liabilities:
Prepaid expenses and other(20,396)(3,001)
Lease right of use assets(128,204)(115,128)
Intangibles(43,879)(51,398)
Total deferred tax liabilities(192,479)(169,527)
Net deferred tax assets$228,108 $203,697 
A reconciliation of the deferred tax assets and liabilities and the corresponding amounts reported in the consolidated balance sheets is as follows:
(in 000s)
As ofJune 30, 2025June 30, 2024
Deferred income tax assets$228,108 $203,697 
Deferred tax liabilities— — 
Net deferred tax asset$228,108 $203,697 
Changes in our valuation allowance for fiscal years 2025, 2024 and 2023 are as follows:
(in 000s)
Year ended June 30,202520242023
Balance, beginning of the year$16,569 $57,566 $55,172 
Additions charged to costs and expenses4,166 4,584 6,438 
Deductions(2,197)(45,581)(4,044)
Balance, end of the year$18,538 $16,569 $57,566 
Our valuation allowance on deferred tax assets has a net increase of $2.0 million during the current period. The $4.2 million of additions charged to costs is primarily related to foreign tax credits that we do not expect to utilize in future years. The increase is offset by a $2.2 million decrease to our valuation allowance balance for adjustments related to certain domestic and foreign net operating losses utilized in the current fiscal year and changes in future projections of net operating loss utilization.
Certain of our subsidiaries file stand-alone returns in various state, local and foreign jurisdictions, and others join in filing consolidated or combined returns in such jurisdictions. As of June 30, 2025, we had net operating losses of $38.9 million in various states and foreign jurisdictions. The amount of state and foreign net operating losses varies by taxing jurisdiction. We maintain a valuation allowance of $4.3 million on state net operating losses and $5.5 million on foreign net operating losses for the portion of such loses that, more likely than not, will not be realized. Of the total net operating loss deferred tax assets, $29.1 million are more likely than not to be realized. Net operating loss deferred tax assets of $10.4 million will expire in varying amounts during fiscal years 2026 through 2045 and the remaining $28.5 million have no expiration.
We do not currently intend to repatriate non-borrowed funds held by our foreign subsidiaries in a manner that would trigger a tax liability; therefore, no provision has been made for income taxes that might be payable upon remittance of such earnings. The amount of unrecognized tax liability on these foreign earnings, net of expected foreign tax credits, is immaterial as of June 30, 2025.
Changes in unrecognized tax benefits for fiscal years 2025, 2024 and 2023 are as follows:
(in 000s)
Year ended June 30,202520242023
Balance, beginning of the year$251,787 $240,063 $232,004 
Additions based on tax positions related to prior years574 1,232 1,252 
Reductions based on tax positions related to prior years— (4,604)— 
Additions based on tax positions related to the current year37,883 37,063 33,330 
Reductions related to settlements with tax authorities(379)(4,472)(661)
Expiration of statute of limitations(23,317)(17,495)(25,862)
Balance, end of the year$266,548 $251,787 $240,063 
Included in the total gross unrecognized tax benefit ending balance as of June 30, 2025, 2024 and 2023 are $232.8 million, $207.5 million and $209.0 million respectively, which if recognized, would impact our effective tax rate. Increases from prior year are primarily related to additions based on current year tax positions offset by expirations of statute of limitations and settlements with taxing authorities.
We believe it is reasonably possible that the balance of unrecognized tax benefits could decrease by approximately $152.0 million within the next twelve months. The anticipated decrease is due to the expiration of statutes of limitations, anticipated closure of various tax matters currently under examination, and settlements with tax authorities. For such matters where a change in the balance of unrecognized tax benefits is not yet deemed reasonably possible, no estimate has been included.
Interest and penalties, if any, accrued on the unrecognized tax benefits are reflected in income tax expense. The total gross interest recorded to income tax expense for periods ending June 30, 2025, 2024 and 2023 totaled $1.4 million, $14.1 million and $10.1 million, respectively. The total penalties, if any, recorded for the same periods
were immaterial. The total gross interest and penalties accrued as of June 30, 2025 and 2024 totaled $44.7 million and $42.0 million, respectively.
The components of income from continuing operations upon which domestic and foreign income taxes have been provided are as follows:
(in 000s)
Year ended June 30,202520242023
Domestic$437,971 $489,912 $447,900 
Foreign343,432 272,410 263,312 
$781,403 $762,322 $711,212 
437971000 489912000 447900000 343432000 272410000 263312000 781403000 762322000 711212000
The reconciliation between the statutory U.S. federal tax rate and our effective tax rate from continuing operations is as follows:
Year ended June 30,202520242023
U.S. statutory tax rate21.0 %21.0 %21.0 %
Change in tax rate resulting from:
State income taxes, net of federal income tax benefit1.3 %1.4 %1.6 %
Earnings taxed in foreign jurisdictions(2.1)%(1.9)%(2.9)%
Permanent differences0.7 %0.7 %0.6 %
Uncertain tax positions1.9 %(0.4)%(0.9)%
U.S. tax on income from foreign affiliates1.7 %4.1 %3.1 %
Federal income tax credits(1.6)%(2.4)%(1.3)%
Foreign investment recapture— %2.6 %— %
Change in valuation allowance - domestic0.3 %— %(0.4)%
Change in valuation allowance - foreign— %(2.8)%0.7 %
Other(1.2)%(0.7)%(0.5)%
Effective tax rate22.0 %21.6 %21.0 %
0.210 0.210 0.210 0.013 0.014 0.016 -0.021 -0.019 -0.029 0.007 0.007 0.006 0.019 -0.004 -0.009 0.017 0.041 0.031 0.016 0.024 0.013 0 -0.026 0 0.003 0 -0.004 0 -0.028 0.007 -0.012 -0.007 -0.005 0.220 0.216 0.210 The components of income tax expense for continuing operations are as follows:
(in 000s)
Year ended June 30,202520242023
Current:
Federal$143,298 $191,664 $97,430 
State30,716 9,695 19,023 
Foreign21,689 18,240 18,214 
195,703 219,599 134,667 
Deferred:
Federal(52,659)(59,441)23,367 
State(4,454)(11,749)1,860 
Foreign33,363 15,950 (10,482)
(23,750)(55,240)14,745 
Total income taxes for continuing operations$171,953 $164,359 $149,412 
143298000 191664000 97430000 30716000 9695000 19023000 21689000 18240000 18214000 195703000 219599000 134667000 -52659000 -59441000 23367000 -4454000 -11749000 1860000 33363000 15950000 -10482000 -23750000 -55240000 14745000 171953000 164359000 149412000
The significant components of deferred tax assets and liabilities are reflected in the following table:
(in 000s)
As ofJune 30, 2025June 30, 2024
Deferred tax assets:
Deferred revenue33,435 50,944 
Allowance for credit losses30,098 30,581 
Deferred and stock-based compensation7,204 8,060 
Net operating loss carry-forward38,856 63,398 
Lease liabilities130,911 117,483 
Federal tax benefits related to state unrecognized tax benefits31,061 26,841 
Internally developed software84,301 15,063 
Intangibles - intellectual property61,138 71,367 
Other22,121 6,056 
Valuation allowance(18,538)(16,569)
Total deferred tax assets420,587 373,224 
Deferred tax liabilities:
Prepaid expenses and other(20,396)(3,001)
Lease right of use assets(128,204)(115,128)
Intangibles(43,879)(51,398)
Total deferred tax liabilities(192,479)(169,527)
Net deferred tax assets$228,108 $203,697 
A reconciliation of the deferred tax assets and liabilities and the corresponding amounts reported in the consolidated balance sheets is as follows:
(in 000s)
As ofJune 30, 2025June 30, 2024
Deferred income tax assets$228,108 $203,697 
Deferred tax liabilities— — 
Net deferred tax asset$228,108 $203,697 
33435000 50944000 30098000 30581000 7204000 8060000 38856000 63398000 130911000 117483000 31061000 26841000 84301000 61138000 71367000 18538000 16569000 420587000 373224000 20396000 3001000 128204000 115128000 43879000 51398000 192479000 169527000 228108000 203697000 228108000 203697000 0 0 228108000 203697000
Changes in our valuation allowance for fiscal years 2025, 2024 and 2023 are as follows:
(in 000s)
Year ended June 30,202520242023
Balance, beginning of the year$16,569 $57,566 $55,172 
Additions charged to costs and expenses4,166 4,584 6,438 
Deductions(2,197)(45,581)(4,044)
Balance, end of the year$18,538 $16,569 $57,566 
16569000 4166000 4584000 2197000 45581000 18538000 16569000 2000000 4200000 2200000 38900000 4300000 5500000 29100000 10400000 2026 28500000
Changes in unrecognized tax benefits for fiscal years 2025, 2024 and 2023 are as follows:
(in 000s)
Year ended June 30,202520242023
Balance, beginning of the year$251,787 $240,063 $232,004 
Additions based on tax positions related to prior years574 1,232 1,252 
Reductions based on tax positions related to prior years— (4,604)— 
Additions based on tax positions related to the current year37,883 37,063 33,330 
Reductions related to settlements with tax authorities(379)(4,472)(661)
Expiration of statute of limitations(23,317)(17,495)(25,862)
Balance, end of the year$266,548 $251,787 $240,063 
251787000 240063000 232004000 574000 1232000 1252000 0 4604000 0 37883000 37063000 33330000 379000 4472000 661000 23317000 17495000 25862000 266548000 251787000 240063000 232800000 207500000 209000000.0 152000000.0 1400000 14100000 10100000 44700000 42000000.0
NOTE 10: COMMITMENTS AND CONTINGENCIES
Our U.S. and Canadian businesses offer our 100% accuracy guarantee. Assisted tax returns are covered by our 100% accuracy guarantee, whereby we will reimburse a client for penalties and interest attributable to an H&R Block error on a return. DIY tax returns are covered by our 100% accuracy guarantee, whereby we will reimburse a client (up to a maximum of $10,000 in the U.S), if our software makes an arithmetic error that results in payment of penalties and/or interest to the respective taxing authority that a client would otherwise not have been required to pay. Our liability related to estimated losses under the 100% accuracy guarantee was $11.4 million and $14.1 million as of June 30, 2025 and 2024, respectively. The short-term and long-term portions of this liability are included in deferred revenue and other liabilities in the consolidated balance sheets.
Liabilities related to acquisitions for (1) estimated contingent consideration based on expected financial performance of the acquired business and economic conditions at the time of acquisition and (2) estimated accrued compensation related to continued employment of key employees were $29.6 million and $26.9 million as of June 30, 2025 and 2024, respectively, with amounts recorded in deferred revenue and other liabilities. These liabilities will be settled within the next ten years. Should actual results differ from our estimates, future payments made will differ from the above estimate and any differences will be recorded in results from continuing operations.
We have contractual commitments to fund certain franchises with approved short-term lines of credit for the purpose of meeting their seasonal working capital needs. Our total obligation under these lines of credit was $0.4 million as of June 30, 2025, and net of amounts drawn and outstanding, our remaining commitment to fund totaled $0.2 million.
We are self-insured for certain risks, including employer provided medical benefits, workers' compensation, property, general liability, tax errors and omissions, and claims related to POM. These programs maintain various self-insured retentions and commercial insurance is purchased in excess of the self-insured retentions for all but POM in company-owned offices and employer provided medical benefits. We accrue estimated losses for self-insured retentions using actuarial models and assumptions based on historical loss experience.
We have a deferred compensation plan that permits certain employees to defer portions of their compensation and accrue income on the deferred amounts. Included in deferred revenue and other liabilities is $9.0 million and $10.1 million as of June 30, 2025 and 2024, respectively, reflecting our obligation under this plan.
Emerald Advance® term loans are originated by Pathward® N.A. (Pathward). We purchase participation interests, at par, in all EAs originated by Pathward in accordance with our participation agreement. Our participation interest varies by jurisdiction. During fiscal year 2025, our purchased participation interests represented 87% of total EA volume originated by Pathward. See note 4 for additional information about these balances.
Refund Advance loans are originated by Pathward and offered to certain assisted U.S. tax preparation clients, based on client eligibility as determined by Pathward. We pay fees primarily based on loan size and customer type. We have provided a guarantee up to $18.0 million related to certain loans to clients prior to the IRS accepting electronic filing. We accrued an estimated liability of $2.2 million at June 30, 2025 related to this guarantee. As of June 30, 2024 we had $1.4 million accrued under the Refund Advance guarantee agreement, and we paid $2.6 million, net of recoveries, related to that guarantee during the fiscal year ended June 30, 2025.
We offer POM to U.S. and Canadian clients, whereby we (1) represent our clients if they are audited by a taxing authority, and (2) assume the cost, subject to certain limits, of additional taxes owed by a client resulting from errors attributable to H&R Block. The additional taxes paid under POM have a cumulative limit of $6,000 for U.S. clients and $3,000 CAD for Canadian clients with respect to the federal, state/provincial and local tax returns we prepared for applicable clients during the taxable year protected by POM. A loss on POM would be recognized if the sum of expected costs for services exceeded unearned revenue.
10000 11400000 14100000 29600000 26900000 400000 200000 9000000.0 1400000 2600000 6000 3000
NOTE 11: LEASES
Our lease costs and other information related to operating leases consisted of the following:
(dollars in 000s)
Year ended June 30,202520242023
Operating lease costs$244,127 $242,372 $238,899 
Variable lease costs93,216 88,629 85,239 
Subrental income(464)(508)(575)
Total lease costs$336,879 $330,493 $323,563 
Cash paid for operating lease costs$239,792 $239,292 $236,423 
New operating right of use assets and related lease liabilities$293,190 $266,970 $253,755 
Weighted-average remaining operating lease term (years)332
Weighted-average operating lease discount rate5.0%5.0%4.1%
Aggregate operating lease maturities as of June 30, 2025 are as follows:
(in 000s)
2026$230,102 
2027166,425 
2028102,033 
202945,036 
203019,309 
2031 and thereafter11,898 
Total future undiscounted operating lease payments574,803 
Less imputed interest(42,753)
Total operating lease liabilities$532,050 
ur lease costs and other information related to operating leases consisted of the following:
(dollars in 000s)
Year ended June 30,202520242023
Operating lease costs$244,127 $242,372 $238,899 
Variable lease costs93,216 88,629 85,239 
Subrental income(464)(508)(575)
Total lease costs$336,879 $330,493 $323,563 
Cash paid for operating lease costs$239,792 $239,292 $236,423 
New operating right of use assets and related lease liabilities$293,190 $266,970 $253,755 
Weighted-average remaining operating lease term (years)332
Weighted-average operating lease discount rate5.0%5.0%4.1%
244127000 242372000 238899000 93216000 88629000 85239000 464000 508000 575000 336879000 330493000 323563000 239792000 239292000 236423000 293190000 266970000 253755000 P3Y P3Y P2Y 0.050 0.050 0.041
Aggregate operating lease maturities as of June 30, 2025 are as follows:
(in 000s)
2026$230,102 
2027166,425 
2028102,033 
202945,036 
203019,309 
2031 and thereafter11,898 
Total future undiscounted operating lease payments574,803 
Less imputed interest(42,753)
Total operating lease liabilities$532,050 
230102000 166425000 102033000 45036000 19309000 11898000 574803000 42753000 532050000
NOTE 12: LITIGATION AND OTHER RELATED CONTINGENCIES
We are a respondent in numerous litigation and arbitration matters, arising both in the ordinary course of business and otherwise, including as described below. The matters described below are not all of the lawsuits or arbitrations to which we are subject. In some of the matters, very large or indeterminate amounts, including punitive damages, may be sought. Various jurisdictions and arbitration forums permit considerable variation in the assertion of monetary damages or other relief. The jurisdictions or forums may permit claimants not to specify the monetary damages sought or may permit claimants to state only that the amount sought is sufficient to invoke the jurisdiction or forum. In addition, the jurisdictions or forums may permit claimants to allege monetary damages in amounts well exceeding reasonably possible verdicts in the jurisdiction or forum for similar matters. We believe that the monetary relief which may be specified in a lawsuit or arbitration matter bears little relevance to its merits or disposition value due to this variability in pleadings and our experience in handling and resolving numerous claims over an extended period of time.
The outcome of a matter and the amount or range of potential loss at particular points in time may be difficult to ascertain. Among other things, uncertainties can include how fact finders will evaluate documentary evidence and the credibility and effectiveness of witness testimony, and how courts and arbitrators will apply the law. Disposition valuations are also subject to the uncertainty of how opposing parties and their counsel will view the relevant evidence, circumstances, and applicable law.
In addition to litigation and arbitration matters, we are also subject to other loss contingencies arising out of our business activities, including as described below.
We accrue liabilities for litigation, arbitration, and other related loss contingencies and any related settlements when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. If a range of loss is estimated, and some amount within that range appears to be a better estimate than any other
amount within that range, then that amount is accrued. If no amount within the range can be identified as a better estimate than any other amount, we accrue the minimum amount in the range.
For such matters where a loss is believed to be reasonably possible, but not probable, or the loss cannot be reasonably estimated, no accrual has been made. It is possible that such matters could require us to pay damages or make other expenditures or accrue liabilities in amounts that could not be reasonably estimated as of June 30, 2025. While the potential future liabilities could be material in the particular quarterly or annual periods in which they are recorded, based on information currently known, we do not believe any such liabilities are likely to have a material adverse effect on our business and our consolidated financial position, results of operations, and cash flows. As of June 30, 2025 and 2024 our total accrued liabilities were $6.2 million and $7.2 million, respectively.
Our estimate of the aggregate range of reasonably possible losses includes (1) matters where a liability has been accrued and there is a reasonably possible loss in excess of the amount accrued for that liability, and (2) matters where a liability has not been accrued but we believe a loss is reasonably possible. This aggregate range only represents those losses as to which we are currently able to estimate a reasonably possible loss or range of loss. It does not represent our maximum loss exposure.
Matters for which we are not currently able to estimate the reasonably possible loss or range of loss are not included in this range. We are often unable to estimate the possible loss or range of loss until developments in such matters have provided sufficient information to support an assessment of the reasonably possible loss or range of loss, such as precise information about the amount of damages or other remedies being asserted, the defenses to the claims being asserted, discovery from other parties and investigation of factual allegations, rulings by courts or arbitrators on motions or appeals, analyses by experts, or the status or terms of any settlement negotiations.
The estimated range of reasonably possible loss is based upon currently available information and is subject to significant judgment and a variety of assumptions, as well as known and unknown uncertainties. The matters underlying the estimated range will change from time to time, and actual results may vary significantly from the current estimate. As of June 30, 2025, we believe the estimate of the aggregate range of reasonably possible losses in excess of amounts accrued, where the range of loss can be estimated, is not material.
At the end of each reporting period, we review relevant information with respect to litigation, arbitration and other related loss contingencies and update our accruals, disclosures, and estimates of reasonably possible loss or range of loss based on such reviews. Costs incurred with defending matters are expensed as incurred. Any receivable for insurance recoveries is recorded separately from the corresponding liability, and only if recovery is determined to be probable and reasonably estimable.
We believe we have meritorious defenses to the claims asserted in the various matters described in this note, and we intend to defend them vigorously. The amounts claimed in the matters are substantial, however, and there can be no assurances as to their outcomes. In the event of unfavorable outcomes, it could require modifications to our operations; in addition, the amounts that may be required to be paid to discharge or settle the matters could be substantial and could have a material adverse impact on our business and our consolidated financial position, results of operations, and cash flows.
We have received and are responding to certain governmental inquiries, class actions, and mass arbitrations relating to the IRS Free File Program and other aspects of our DIY tax preparation services, including the use of pixels. An accrual related to these matters is included in our loss contingency accrual.
We are from time to time a party to litigation, arbitration, and other loss contingencies not discussed herein arising out of our business operations. These matters may include actions by state attorneys general, other state regulators, federal regulators, individual claimants, and cases in which claimants seek to represent others who may be similarly situated.
While we cannot provide assurance that we will ultimately prevail in each instance, we believe the amount, if any, we are required to pay to discharge or settle these other matters will not have a material adverse impact on our business and our consolidated financial position, results of operations, and cash flows.
6200000 7200000
NOTE 13: SEGMENT INFORMATION
We provide assisted and DIY tax preparation solutions through multiple channels (including in-person, online and mobile applications, virtual, and desktop software) and distribute H&R Block-branded services and products, including those of our bank partners, to the general public primarily in the U.S., Canada and Australia. We report a single segment that includes all of our continuing operations. The majority of our revenues are from our U.S. tax services business.
The Company's Chief Operating Decision Maker (CODM) is our chief executive officer, who regularly reviews consolidated financial information to evaluate financial performance and allocate resources. Specifically, the CODM uses revenues, operating expenses, net income and EBITDA at a consolidated level, as key financial metrics in deciding how to reinvest to grow the business through our strategic imperatives of Block Experience, Financial Products and Small Business. These financial metrics are used by the CODM to make operating decisions and identify growth opportunities. The measure of segment assets is total consolidated assets as presented on the consolidated balance sheet.
The following table presents the significant revenue and expense categories included in the segment's net income from continuing operations as regularly provided to the CODM on a consolidated basis and then reconciled to net income for the years ended June 30, 2025 , 2024 and 2023:
Consolidated – Financial Results   (in 000s, except per share amounts)
Year ended June 30,202520242023
Revenues:
U.S. tax preparation and related services:
Assisted tax preparation$2,413,229 $2,274,835 $2,167,138 
Royalties192,877 204,802 210,631 
DIY tax preparation383,738 349,812 314,758 
Refund Transfers137,526 142,249 143,310 
Peace of Mind® Extended Service Plan87,326 93,087 95,181 
Tax Identity Shield®29,920 33,386 38,265 
Emerald Card® and SpruceSM
72,888 76,093 84,651 
Interest and fee income on Emerald Advance®28,958 40,933 47,554 
International 246,993 247,123 235,131 
Wave109,222 96,472 90,314 
Other58,318 51,555 45,252 
Total revenues$3,760,995 $3,610,347 $3,472,185 
Compensation and benefits:
Field wages927,360 869,002 841,742 
Other wages306,999 298,819 273,850 
Benefits and other compensation250,729 228,723 220,530 
1,485,088 1,396,544 1,336,122 
Occupancy438,868 432,461 428,167 
Marketing and advertising285,800 277,747 286,255 
Depreciation and amortization116,827 121,784 130,501 
Bad debt74,584 91,523 60,401 
Other531,858 485,011 482,041 
Total operating expenses2,933,025 2,805,070 2,723,487 
Other income (expense), net31,546 36,125 35,492 
Interest expense on borrowings(78,113)(79,080)(72,978)
Income from continuing operations before income taxes781,403 762,322 711,212 
Income taxes171,953 164,359 149,412 
Segment net income from continuing operations$609,450 $597,963 $561,800 
Reconciliation of segment profit:
Reconciling items:
         Net loss from discontinued operations(3,677)(2,646)(8,100)
Net income$605,773 $595,317 $553,700 
The following table presents the significant revenue and expense categories included in the segment's net income from continuing operations as regularly provided to the CODM on a consolidated basis and then reconciled to net income for the years ended June 30, 2025 , 2024 and 2023:
Consolidated – Financial Results   (in 000s, except per share amounts)
Year ended June 30,202520242023
Revenues:
U.S. tax preparation and related services:
Assisted tax preparation$2,413,229 $2,274,835 $2,167,138 
Royalties192,877 204,802 210,631 
DIY tax preparation383,738 349,812 314,758 
Refund Transfers137,526 142,249 143,310 
Peace of Mind® Extended Service Plan87,326 93,087 95,181 
Tax Identity Shield®29,920 33,386 38,265 
Emerald Card® and SpruceSM
72,888 76,093 84,651 
Interest and fee income on Emerald Advance®28,958 40,933 47,554 
International 246,993 247,123 235,131 
Wave109,222 96,472 90,314 
Other58,318 51,555 45,252 
Total revenues$3,760,995 $3,610,347 $3,472,185 
Compensation and benefits:
Field wages927,360 869,002 841,742 
Other wages306,999 298,819 273,850 
Benefits and other compensation250,729 228,723 220,530 
1,485,088 1,396,544 1,336,122 
Occupancy438,868 432,461 428,167 
Marketing and advertising285,800 277,747 286,255 
Depreciation and amortization116,827 121,784 130,501 
Bad debt74,584 91,523 60,401 
Other531,858 485,011 482,041 
Total operating expenses2,933,025 2,805,070 2,723,487 
Other income (expense), net31,546 36,125 35,492 
Interest expense on borrowings(78,113)(79,080)(72,978)
Income from continuing operations before income taxes781,403 762,322 711,212 
Income taxes171,953 164,359 149,412 
Segment net income from continuing operations$609,450 $597,963 $561,800 
Reconciliation of segment profit:
Reconciling items:
         Net loss from discontinued operations(3,677)(2,646)(8,100)
Net income$605,773 $595,317 $553,700 
2413229000 2274835000 192877000 204802000 383738000 349812000 137526000 142249000 87326000 93087000 29920000 33386000 72888000 76093000 28958000 40933000 246993000 247123000 109222000 96472000 58318000 51555000 3760995000 3610347000 285800000 277747000 286255000 -3677000 false false false false 34 The balance of our accumulated other comprehensive income (loss) consists of foreign currency translation adjustments. Represents shares swapped or surrendered to us in connection with the vesting or exercise of stock-based awards.