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Income Taxes
 12 Months Ended
Jan. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The domestic and foreign components of income before provision for (benefit from) income taxes consisted of the following (in millions):
 Fiscal Year Ended January 31,
 202520242023
Domestic$5,119 $4,045 $398 
Foreign2,319 905 262 
$7,438 $4,950 $660 
The provision for (benefit from) income taxes consisted of the following (in millions):
 Fiscal Year Ended January 31,
 202520242023
Current:
Federal$1,284 $940 $173 
State245 199 216 
Foreign925 417 397 
Total2,454 1,556 786 
Deferred:
Federal(982)(640)(134)
State(167)(182)(203)
Foreign(64)80 3 
Total(1,213)(742)(334)
Provision for (benefit from) income taxes$1,241 $814 $452 
A reconciliation of income taxes at the statutory federal income tax rate to the provision for (benefit from) income taxes included in the accompanying consolidated statements of operations is as follows (in millions):
 Fiscal Year Ended January 31,
 202520242023
U.S. federal taxes at statutory rate$1,562 $1,040 $139 
State, net of the federal benefit106 19 29 
Effects of non-U.S. operations (1)315 29 287 
Tax credits(270)(332)(239)
Non-deductible expenses100 43 94 
Foreign-derived intangible income deduction (2)(373)(56)(55)
(Windfall)/shortfall related to share-based compensation(215)(36)31 
Change in valuation allowance 51 101 171 
Other, net(35)6 (5)
Provision for (benefit from) income taxes$1,241 $814 $452 
(1) Fiscal 2024 effects of non-U.S. operations included tax benefits from foreign tax credits attributable to IRS notices.
(2) Fiscal 2025 foreign-derived intangible income deduction included tax benefits related to an adjustment for fiscal 2023 and 2024.
Deferred Income Taxes
Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
Significant components of the Company’s deferred tax assets and liabilities were as follows (in millions):
 As of January 31,
 20252024
Deferred tax assets:
Losses and deductions carryforward$209 $176 
Deferred stock-based compensation expense237 219 
Tax credits769 760 
Accrued liabilities482 419 
Intangible assets1,694 1,899 
Lease liabilities740 818 
Unearned revenue(28)37 
Capitalized research & development2,431 1,710 
Other65 81 
Total deferred tax assets6,599 6,119 
Less valuation allowance(786)(733)
Deferred tax assets, net of valuation allowance5,813 5,386 
Deferred tax liabilities:
Capitalized costs to obtain revenue contracts(850)(873)
Purchased intangible assets(650)(1,030)
Depreciation and amortization(164)(263)
Basis difference on strategic and other investments(106)(181)
Lease right-of-use assets(554)(636)
Total deferred tax liabilities(2,324)(2,983)
Net deferred tax assets (liabilities)$3,489 $2,403 
At January 31, 2025, the Company had federal net operating loss carryforwards of approximately $415 million, which expire in fiscal 2026 and through fiscal 2038 with the exception of post-2017 losses that do not expire, federal research and development tax credits of approximately $5 million, which expire in fiscal 2029 through fiscal 2045, foreign tax credits of approximately $164 million, which expire in fiscal 2029 through fiscal 2035. The Company had California net operating loss carryforwards of approximately $480 million which expire beginning in fiscal 2029 through fiscal 2045, California research and development tax credits of approximately $932 million, which do not expire. For other states' income tax purposes, the Company had tax credits of approximately $75 million, which expire beginning in fiscal 2026 through fiscal 2034, and insignificant net operating loss carryforwards. Utilization of the Company’s net operating loss carryforwards are subject to annual limitation due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. Such an annual limitation could result in the expiration of the net operating loss and tax credit carryforwards before utilization.
The Company had a valuation allowance of $786 million and $733 million as of January 31, 2025 and January 31, 2024, respectively. The Company regularly assesses the realizability of its deferred tax assets and establishes a valuation allowance if it is more-likely-than-not that some or all of its deferred tax assets will not be realized. The Company evaluates and weighs all available positive and negative evidence such as historic results, future reversals of existing deferred tax liabilities, projected future taxable income, as well as prudent and feasible tax-planning strategies. The assessment requires significant judgment and is performed in each of the applicable jurisdictions. The increase in the valuation allowance during fiscal 2025 was primarily due to state tax credits and certain U.S foreign tax credits that are not expected to be realized. At the end of January 31, 2025, the valuation allowance was primarily related to U.S. states’ net operating loss and tax credits and certain U.S foreign tax credits. The Company will continue to evaluate the need for valuation allowances for its deferred tax assets.
Unrecognized Tax Benefits and Other Considerations
The Company records liabilities related to its uncertain tax positions. Tax positions for the Company and its subsidiaries are subject to income tax audits by multiple tax jurisdictions throughout the world. The Company recognizes the tax benefit of an uncertain tax position only if it is more likely than not that the position is sustainable upon examination by the taxing authority, based on the technical merits. The tax benefit recognized is measured as the largest amount of benefit which is greater than 50 percent likely to be realized upon settlement with the taxing authority.
A reconciliation of the beginning and ending balance of total unrecognized tax benefits for fiscal years 2025, 2024 and 2023 is as follows (in millions):
 Fiscal Year Ended January 31,
 202520242023
Beginning of period$2,083 $1,975 $1,822 
Tax positions taken in prior period:
Gross increases53 53 53 
Gross decreases(65)(85)(45)
Tax positions taken in current period:
Gross increases378 287 227 
Settlements(4)(21)(40)
Lapse of statute of limitations(25)(104)(12)
Currency translation effect(1)(22)(30)
End of period$2,419 $2,083 $1,975 
In fiscal 2025, 2024 and 2023, the Company reported a net increase of approximately $336 million, $108 million, and $153 million, respectively, in its unrecognized tax benefits. For fiscal 2025, 2024 and 2023, total unrecognized tax benefits in an amount of $1.7 billion, $1.7 billion and $1.5 billion, respectively, if recognized, would have reduced income tax expense and the Company’s effective tax rate.
The Company has recognized interest and penalties related to unrecognized tax benefits in the income tax provision of $89 million, $29 million and $48 million in fiscal 2025, 2024 and 2023, respectively. Interest and penalties accrued as of January 31, 2025, 2024 and 2023, were $225 million, $136 million and $107 million, respectively.
Certain prior year tax returns are currently being examined by various taxing authorities in major tax jurisdictions including the United States, Germany and Israel. The Company currently considers U.S. federal, Japan, Australia, Germany, France, United Kingdom, Ireland, Canada, India and Israel to be major tax jurisdictions. The Company’s U.S. federal tax returns since fiscal 2008 remain open to examination, and non-U.S. tax returns generally remain open to examination since fiscal 2019. The Company believes that it has provided adequate reserves for its income tax uncertainties in all open tax years. As the outcome of the tax audits cannot be predicted with certainty, if any issues addressed in the Company's tax audits are resolved in a manner inconsistent with management's expectations, the Company could adjust its provision for income taxes in the future.
The Company anticipates it is reasonably possible that an insignificant decrease of its unrecognized tax benefits may occur in the next 12 months, as the applicable statutes of limitations lapse, ongoing examinations are completed, or tax positions meet the conditions of being effectively settled.