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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
In 2022, 2023, and 2024, we recorded a net tax provision (benefit) of $(3.2) billion, $7.1 billion, and $9.3 billion. Our U.S. taxable income is reduced by accelerated depreciation deductions and increased by the impact of capitalized research and development expenses. Cash paid for income taxes, net of refunds, was $6.0 billion, $11.2 billion, and $12.3 billion for 2022, 2023, and 2024.
Certain foreign subsidiary earnings and losses are subject to current U.S. taxation and the subsequent repatriation of those earnings is not subject to tax in the U.S. The U.S. tax rules also provide for enhanced accelerated depreciation deductions by allowing us to expense a portion of qualified property, primarily equipment. These enhanced deductions are scheduled to phase out annually from 2023 through 2026. Our federal tax provision included accelerated depreciation deductions for 2022, 2023, and 2024. Effective January 1, 2022, research and development expenses are required to be capitalized and amortized for U.S. tax purposes.
The components of the provision (benefit) for income taxes, net are as follows (in millions):
 Year Ended December 31,
202220232024
U.S. Federal:
Current$2,175 $8,652 $9,039 
Deferred(6,686)(5,505)(4,101)
Total(4,511)3,147 4,938 
U.S. State:
Current1,074 2,158 2,109 
Deferred(1,302)(498)(453)
Total(228)1,660 1,656 
International:
Current1,682 2,186 2,765 
Deferred(160)127 (94)
Total1,522 2,313 2,671 
Provision (benefit) for income taxes, net$(3,217)$7,120 $9,265 
U.S. and international components of income (loss) before income taxes are as follows (in millions):
 Year Ended December 31,
 202220232024
U.S.$(8,225)$32,328 $61,947 
International2,289 5,229 6,667 
Income (loss) before income taxes$(5,936)$37,557 $68,614 
The items accounting for differences between income taxes computed at the federal statutory rate and the provision (benefit) recorded for income taxes are as follows (in millions):
 Year Ended December 31,
 202220232024
Income taxes computed at the federal statutory rate$(1,246)$7,887 $14,409 
Effect of:
Tax impact of foreign earnings and losses(370)594 199 
State taxes, net of federal benefits(173)1,307 1,306 
Tax credits(1,006)(2,362)(2,805)
Stock-based compensation (1)612 1,047 (1,688)
Foreign income deduction (2)(1,258)(1,429)(2,379)
Other, net224 76 223 
Total$(3,217)$7,120 $9,265 
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(1)Includes non-deductible stock-based compensation and excess tax benefits or shortfalls from stock-based compensation. Our tax provision includes $33 million and $519 million of tax shortfalls from stock-based compensation for 2022 and 2023, and $2.8 billion of excess tax benefits from stock-based compensation for 2024.
(2)U.S. companies are eligible for a deduction that lowers the effective tax rate on certain foreign income. This regime is referred to as the Foreign-Derived Intangible Income deduction and is dependent on the amount of our U.S. taxable income.
We recorded a provision for income taxes in 2023 as compared to an income tax benefit in 2022 primarily due to an increase in pretax income, a decrease in the tax impact of foreign earnings and losses driven by a decline in the favorable effects of corporate restructuring transactions, and an increase in tax shortfalls from stock-based compensation. This was partially offset by an increase in federal research and development credits, which included approximately $600 million of tax benefit recorded in 2023 related to a change in the estimated qualifying expenditures associated with our 2022 U.S. federal R&D credit.
Our provision for income taxes in 2024 was higher than in 2023 primarily due to an increase in pretax income, partially offset by an increase in excess tax benefits from stock-based compensation and an increase in our foreign income deduction.
We intend to invest substantially all of our foreign subsidiary earnings, as well as our capital in our foreign subsidiaries, indefinitely outside of the U.S. in those jurisdictions in which we would incur significant, additional costs upon repatriation of such amounts.
Deferred income tax assets and liabilities are as follows (in millions):
 December 31,
 20232024
Deferred tax assets (1):
Loss carryforwards U.S. - Federal/States$610 $692 
Loss carryforwards - Foreign2,796 2,687 
Accrued liabilities, reserves, and other expenses3,751 4,254 
Stock-based compensation5,279 4,089 
Depreciation and amortization1,114 1,133 
Operating lease liabilities19,922 20,921 
Capitalized research and development14,800 22,701 
Other items745 1,688 
Tax credits1,582 1,773 
Total gross deferred tax assets50,599 59,938 
Less valuation allowances (2)(4,811)(4,893)
Deferred tax assets, net of valuation allowances45,788 55,045 
Deferred tax liabilities:
Depreciation and amortization(12,454)(16,240)
Operating lease assets(18,648)(19,517)
Other items(1,489)(3,323)
Net deferred tax assets (liabilities), net of valuation allowances$13,197 $15,965 
 ___________________
(1)Deferred tax assets are presented after tax effects and net of tax contingencies.
(2)Relates primarily to deferred tax assets that would only be realizable upon the generation of net income in certain foreign taxing jurisdictions or future capital gains, as well as tax credits.
Our valuation allowances primarily relate to foreign deferred tax assets, including substantially all of our foreign net operating loss carryforwards as of December 31, 2024. Our foreign net operating loss carryforwards for income tax purposes as of December 31, 2024 were approximately $9.9 billion before tax effects and certain of these amounts are subject to annual limitations under applicable tax law. If not utilized, a portion of these losses will begin to expire in 2025.
Income Tax Contingencies
We are subject to income taxes in the U.S. (federal and state) and numerous foreign jurisdictions. Significant judgment is required in evaluating our tax positions and determining our provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. We establish reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. These reserves are established when we believe that certain positions might be challenged despite our belief that our tax return positions are fully supportable. We adjust these reserves in light of changing facts and circumstances, such as the outcome of tax audits. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate.
The reconciliation of our income tax contingencies is as follows (in millions):
 December 31,
 202220232024
Gross tax contingencies – January 1$3,242 $4,002 $5,228 
Gross increases to tax positions in prior periods274 440 154 
Gross decreases to tax positions in prior periods(172)(38)(129)
Gross increases to current period tax positions706 1,009 1,392 
Settlements with tax authorities(20)(106)(9)
Lapse of statute of limitations(28)(79)(151)
Gross tax contingencies – December 31 (1)$4,002 $5,228 $6,485 
 ___________________
(1)As of December 31, 2024, we had approximately $6.5 billion of income tax contingencies of which $4.4 billion, if fully recognized, would decrease our effective tax rate.
As of December 31, 2023 and 2024, we had accrued interest and penalties, net of federal income tax benefit, related to tax contingencies of $194 million and $316 million. Interest and penalties, net of federal income tax benefit, recognized for the years ended December 31, 2022, 2023, and 2024 were $(7) million, $91 million, and $121 million.
We are under examination, or may be subject to examination, by the Internal Revenue Service for the calendar year 2016 and thereafter. These examinations may lead to ordinary course adjustments or proposed adjustments to our taxes or our net operating losses with respect to years under examination as well as subsequent periods.
We are also subject to taxation in various states and foreign jurisdictions including China, France, Germany, India, Japan, Luxembourg, and the United Kingdom. We are under, or may be subject to, audit or examination and additional assessments by the relevant authorities in respect of these particular jurisdictions primarily for 2011 and thereafter. We are currently disputing tax assessments in multiple jurisdictions, including with respect to the allocation and characterization of income.
In September 2022, the Luxembourg tax authority (“LTA”) denied the tax basis of certain intangible assets that we distributed from Luxembourg to the U.S. in 2021. When we are assessed by the LTA, we will need to remit taxes related to this matter. We believe the LTA’s position is without merit, we intend to defend ourselves vigorously in this matter, and we expect to recoup taxes paid.
The Indian tax authority (“ITA”) has asserted that tax applies to cloud services fees paid to Amazon in the U.S. We will need to remit taxes related to this matter until it is resolved, which payments could be significant in the aggregate. We believe the ITA’s position is without merit, we are defending our position vigorously, and we expect to recoup taxes paid. If this matter is adversely resolved, we could recognize significant additional tax expense, including for taxes previously paid.
Changes in tax laws, regulations, administrative practices, principles, and interpretations may impact our tax contingencies. Due to various factors, including the inherent complexities and uncertainties of the judicial, administrative, and regulatory processes in certain jurisdictions, the timing of the resolution of income tax controversies is highly uncertain, and the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ from the amounts accrued. It is reasonably possible that within the next twelve months we will receive additional assessments by various tax authorities or possibly reach resolution of income tax controversies in one or more jurisdictions. These assessments or settlements could result in changes to our contingencies related to positions on prior years’ tax filings. The actual amount of any change could vary significantly depending on the ultimate timing and nature of any settlements. We cannot currently provide an estimate of the range of possible outcomes.