Income taxes payable

Income taxes payable is income tax a company owes to tax authorities but has not yet paid at the balance sheet date. It sits in current liabilities because it is normally due within the next twelve months.

It arises because companies pay tax in instalments and settle the balance after the year ends, so part of each year's tax bill is still owed when the books close.

It differs from the income tax expense on the income statement, which is the tax charged against the period's profit, and from deferred tax liabilities, which are taxes owed further in the future because accounting and tax rules record some items at different times. When income taxes payable rises, the company has kept cash it will hand over later. That is one part of the change in income taxes line on the cash flow statement, which also includes deferred and long term tax balances, so the two rarely move by the same amount.