INCOME TAXES

12 Months Ended

Feb. 02, 2025

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

Provision for Income Taxes

The following table presents our earnings before the provision for income taxes:

in millions	Fiscal		Fiscal		Fiscal
	2024		2023		2022
United States	$	18,119	$	18,681	$	20,990
Foreign	1,287		1,243		1,487
Total	$	19,406	$	19,924	$	22,477

The following table presents our provision for income taxes:

in millions	Fiscal		Fiscal		Fiscal
	2024		2023		2022
Current:
Federal	$	3,417	$	3,764	$	3,918
State	836		882		880
Foreign	386		365		436
Total current	4,639		5,011		5,234
Deferred:
Federal	(67)		(228)		102
State	25		12		61
Foreign	3		(14)		(25)
Total deferred	(39)		(230)		138
Provision for income taxes	$	4,600	$	4,781	$	5,372

The following table presents our combined federal, state, and foreign effective tax rates:

	Fiscal		Fiscal		Fiscal
	2024		2023		2022
Combined federal, state, and foreign effective tax rates	23.7	%	24.0	%	23.9	%

The following table presents the reconciliation of our provision for income taxes at the federal statutory rate of 21% to the actual tax expense:

in millions	Fiscal		Fiscal		Fiscal
	2024		2023		2022
Income taxes at federal statutory rate	$	4,075	$	4,184	$	4,720
State income taxes, net of federal income tax benefit	680		706		743
Other, net	(155)		(109)		(91)
Total	$	4,600	$	4,781	$	5,372

Deferred Taxes

The following table presents the tax effects of temporary differences that give rise to significant portions of our deferred tax assets and deferred tax liabilities:

in millions	February 2, 2025		January 28, 2024
Assets:
Deferred compensation	$	230	$	237
Accrued self-insurance liabilities	271		258
State income taxes	133		209
Merchandise inventories	—		110
Non-deductible reserves	475		474
Net operating losses	92		99
Lease liabilities	2,255		2,034
Deferred revenue	259		191
Other	77		46
Total deferred tax assets	3,792		3,658
Valuation allowance	(4)		(67)
Total deferred tax assets, net of valuation allowance	3,788		3,591
Liabilities:
Merchandise inventories	(12)		—
Property and equipment	(854)		(988)
Goodwill and other intangibles (1)	(2,200)		(1,000)
Lease right-of-use assets	(2,178)		(1,956)
Tax on unremitted earnings	(54)		(53)
Other	(183)		(144)
Total deferred tax liabilities	(5,481)		(4,141)
Net deferred tax liabilities	$	(1,693)	$	(550)

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(1)    Increase year over year primarily results from the difference in book and tax basis related to identifiable intangible assets from the SRS acquisition (See Note 13).

The following table presents our noncurrent deferred tax assets and noncurrent deferred tax liabilities, netted by tax jurisdiction, as presented on the consolidated balance sheets:

in millions	Consolidated Balance Sheet Classification	February 2, 2025		January 28, 2024
Deferred tax assets	Other assets	$	269	$	313
Deferred tax liabilities	Deferred income taxes	(1,962)		(863)
Net deferred tax liabilities		$	(1,693)	$	(550)

As of February 2, 2025, we recorded immaterial amounts for deferred tax assets for net operating losses as well as tax credits, primarily related to state jurisdictions. These losses and credits expire at various dates beginning in 2025 and 2026, respectively. We have concluded that it is more likely than not that tax benefits related to substantially all net operating losses and tax credits will be realized based upon the expectation that we will generate the necessary taxable income in future periods. The overall change in our valuation allowance was not material in fiscal 2024.

Reinvestment of Unremitted Earnings

Substantially all of our current year foreign cash earnings in excess of working capital and cash needed for strategic investments are not intended to be indefinitely reinvested offshore. Therefore, the tax effects of repatriation for applicable state taxes and foreign withholding taxes of such cash earnings have been provided for in the accompanying consolidated statements of earnings. We have the intent and ability to reinvest substantially all of the $5.1 billion of non-cash unremitted earnings of our non-U.S. subsidiaries indefinitely. Accordingly, no provision for state taxes or foreign withholding taxes was recorded on these unremitted earnings in the accompanying consolidated statements of earnings. It is impracticable for us to determine the amount of unrecognized deferred tax liabilities on these indefinitely reinvested earnings due to the complexities associated with the hypothetical calculation.

Tax Return Examination Status

Our income tax returns are routinely examined by U.S. federal, state and local, and foreign tax authorities. The Company remains subject to income tax examination for fiscal years 2015 through 2023. The IRS is currently examining our U.S. federal income tax returns for fiscal years 2016 through 2021. There are also ongoing U.S. state and local audits and other foreign audits covering fiscal years 2013 through 2022. We do not expect the results from any ongoing income tax audit to have a material impact on our consolidated financial condition, results of operations, or cash flows.

Over the next twelve months, it is reasonably possible that the resolution of federal and state tax examinations, as well as the expiration of statutes of limitations, could reduce our unrecognized tax benefits by an immaterial amount. We do not anticipate the resolution of these matters will result in a material change to our consolidated financial condition, results of operations, or cash flows.

Unrecognized Tax Benefits

The following table reconciles the beginning and ending amount of our gross unrecognized tax benefits:

in millions	Fiscal		Fiscal		Fiscal
	2024		2023		2022
Unrecognized tax benefits balance at beginning of fiscal year	$	689	$	643	$	570
Additions based on tax positions related to the current year	71		74		75
Additions for tax positions of prior years	3		13		22
Reductions for tax positions of prior years	(42)		(14)		(7)
Reductions due to settlements	(51)		—		(1)
Reductions due to lapse of statute of limitations	(43)		(27)		(16)
Unrecognized tax benefits balance at end of fiscal year	$	627	$	689	$	643

Unrecognized tax benefits that if recognized would affect our annual effective income tax rate on net earnings were $509 million, $568 million, and $537 million at February 2, 2025, January 28, 2024, and January 29, 2023, respectively.

Interest and Penalties

Interest and penalties associated with uncertain tax positions recognized in the consolidated statements of earnings were immaterial in fiscal 2024, fiscal 2023, and fiscal 2022. Our total accrued interest and penalties associated with uncertain tax positions were immaterial as of February 2, 2025 and January 28, 2024.

Other

In fiscal 2024, the IRS provided automatic income tax relief to taxpayers in certain southeastern states, extending the timeline to make certain tax payments. As a result, our fourth quarter fiscal 2024 estimated federal tax payment has been deferred to the first quarter of fiscal 2025, which reduced our cash paid for income taxes during fiscal 2024 and increased income taxes payable at February 2, 2025.