Income Taxes

3 Months Ended

Dec. 29, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Note 3. Income Taxes

We estimate our annual effective income tax rate to be 11% for fiscal 2025, which is lower than the U.S. federal statutory rate, primarily due to a significant portion of our income qualifying for preferential treatment as foreign-derived intangible income (FDII) at a 13% effective tax rate, which includes certain additional benefits from the requirement to capitalize research and development expenditures for federal income tax purposes (that are expected to continue to decline over time as capitalized research and development expenditures continue to amortize) and a benefit from our federal research and development tax credit. Our effective tax rate of 13% for the first quarter of fiscal 2025 was higher than our estimated annual effective tax rate, primarily due to $107 million of net discrete tax charges, which principally related to foreign currency losses on a noncurrent receivable related to our refund claim of Korean withholding tax. Our effective tax rate of 5% for the first quarter of fiscal 2024 included $79 million of net discrete tax benefits.