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Income Taxes
 12 Months Ended
Sep. 28, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of the income tax provision from continuing operations were as follows (in millions):
202520242023
Current provision:   
Federal$1,682 $1,306 $1,229 
State7 3 10 
Foreign (1)981 805 491 
2,670 2,114 1,730 
Deferred provision (benefit):
   
Federal4,373 (1,553)(1,475)
State(5)(4)(8)
Foreign (1)84 (331)(143)
4,452 (1,888)(1,626)
$7,122 $226 $104 
(1) The foreign component of the income tax provision included foreign withholding taxes on royalty revenues included in U.S. earnings.
The components of income from continuing operations before income taxes by U.S. and foreign jurisdictions were as follows (in millions):
202520242023
United States$11,174 $9,169 $6,400 
Foreign1,489 1,167 1,043 
$12,663 $10,336 $7,443 
The following is a reconciliation of the expected statutory federal income tax provision to our actual income tax provision from continuing operations (in millions, except percentages). A significant portion of our U.S. income qualifies for preferential treatment as FDII at a 13% effective tax rate.
202520242023
Expected income tax provision at federal statutory tax rate$2,659 $2,171 $1,563 
Valuation allowance on federal deferred tax assets resulting from OBBB
5,724 — — 
Benefit from FDII deduction, excluding the impact of capitalizing research and development expenditures(735)(596)(447)
Benefit from FDII deduction related to capitalizing research and development expenditures(492)(585)(598)
Benefit related to research and development tax credits(237)(259)(235)
Excess tax (benefit) deficiency associated with share-based awards(120)(176)3 
Foreign currency losses (gains) related to Korean withholding tax receivable98 (21)(66)
Benefit related to the transfer of intellectual property between foreign subsidiaries
(8)(317)— 
Benefit from fiscal 2021 and 2022 FDII deductions related to a change in sourcing of research and development expenditures— — (126)
Benefit from releasing valuation allowance on unutilized foreign loss carryforwards— — (114)
Other233 9 124 
$7,122 $226 $104 
Effective tax rate56%2%1%
On July 4, 2025, tax reform legislation included in the OBBB was enacted in the United States. The OBBB includes significant corporate tax reforms, including the permanent reinstatement of deducting domestic research and development expenditures as incurred beginning in fiscal 2026 (under prior law such expenditures were capitalized and amortized over five years). The legislation also modifies international tax provisions, including changes to the FDII regime. Specifically, it renames FDII as FDDEI, maintains the current FDDEI effective tax rate of 13% through fiscal 2026 and adjusts the FDDEI effective tax rate to a permanent 14% rate in fiscal 2027 (compared to 16% under prior law).
As a result of these changes, we expect to be subject to CAMT beginning in fiscal 2026. CAMT imposes a 15% federal minimum tax on adjusted financial statement income, reduced by general business credits, including research and development credits. As we expect to perpetually be subject to CAMT, we no longer expect to realize substantially all of our existing federal deferred tax assets and recognized a charge of $5.7 billion to income tax expense to establish a valuation allowance in the fourth quarter of fiscal 2025. Changes in future taxable income (including less of our income qualifying for preferential treatment as FDDEI), tax laws (including changes to the CAMT rules) and other factors may change our determination regarding whether we will be able to realize our deferred tax assets. Our policy is to consider the impact of future years’ CAMT in our valuation allowance assessment of deferred tax assets.
Beginning in fiscal 2023 and through fiscal 2025, for federal income tax purposes, we were required to capitalize and amortize domestic research and development expenditures over five years (such expenditures were previously deducted as incurred). Our cash flows from operations were adversely affected due to significantly higher cash tax payments. However, since the resulting deferred tax asset was established at the statutory rate of 21% (rather than the current effective tax rate of 13% after considering the FDII deduction), capitalization favorably affected our total provision for income taxes and results of operations. With the enactment of OBBB, such impacts on our cash flows and tax provision are not expected to continue beginning in fiscal 2026.
In the fourth quarter of fiscal 2024, we completed an intra-group transfer of intellectual property to better align certain intellectual property ownership within our QCT business, which resulted in the recognition of a tax benefit of $317 million during the fourth quarter of fiscal 2024 from the establishment of a deferred tax asset. Such tax benefit was based on the value of the intellectual property transferred, which was measured using an income approach based on significant unobservable inputs.
Beginning in fiscal 2019, we applied for partial refund claims for taxes previously withheld from licensees in Korea on payments due under their license agreements to which we have claimed a foreign tax credit in the United States. As a result, $2.2 billion was recorded as noncurrent income taxes receivable (included in other assets) at both September 28, 2025 and September 29, 2024, and $2.6 billion and $2.5 billion were recorded as a noncurrent liability for uncertain tax benefits (included in other liabilities) at September 28, 2025 and September 29, 2024, respectively.
We had deferred tax assets and deferred tax liabilities as follows (in millions):
September 28,
2025		September 29,
2024
Capitalized research and development expenditures
$4,194 $3,015 
Unused tax credits2,527 2,172 
Customer incentives790 769 
Unused net operating losses708 719 
Accrued liabilities and reserves410 397 
Other1,069 1,039 
Total gross deferred tax assets9,698 8,111 
Valuation allowance(8,016)(2,061)
Total net deferred tax assets1,682 6,050 
Intangible assets(367)(388)
Operating lease assets(256)(248)
Unrealized gains on other investments and marketable securities(212)(169)
Other(235)(197)
Total deferred tax liabilities(1,070)(1,002)
Net deferred tax assets$612 $5,048 
Reported as:  
Non-current deferred tax assets$743 $5,162 
Non-current deferred tax liabilities (1)
(131)(114)
$612 $5,048 
(1) Non-current deferred tax liabilities were included in other liabilities in the consolidated balance sheets.
At September 28, 2025, we had unused foreign net operating loss carryforwards of $2.6 billion, of which substantially all may be carried forward indefinitely, unused state net operating loss carryforwards of $790 million expiring from 2026 through 2037 and unused federal net operating loss carryforwards of $90 million, of which substantially all expire from 2026 through 2037. At September 28, 2025, we had unused state tax credits of $2.1 billion, of which substantially all may be
carried forward indefinitely, unused federal tax credits of $363 million expiring from 2028 through 2035 and unused tax credits of $64 million in foreign jurisdictions expiring from 2031 through 2045.
At September 28, 2025, in addition to the $5.7 billion valuation allowance on federal deferred tax assets as a result of the enactment of OBBB, we have provided valuation allowances on certain state tax credits, foreign deferred tax assets and state net operating losses of $2.1 billion, $133 million and $38 million, respectively. The valuation allowances reflect our current expectations regarding our ability to generate sufficient future taxable income in certain tax jurisdictions to utilize our net deferred tax assets. We believe, more likely than not, that we will have sufficient taxable income to utilize our remaining deferred tax assets.
A summary of the changes in the amount of unrecognized tax benefits for fiscal 2025, 2024 and 2023 follows (in millions):
202520242023
Beginning balance of unrecognized tax benefits$2,450 $2,296 $2,191 
Additions based on prior year tax positions158 2 10 
Reductions for prior year tax positions and lapse in statute of limitations(93)(1)(63)
Additions for current year tax positions153 153 158 
Ending balance of unrecognized tax benefits$2,668 $2,450 $2,296 
Of the $2.7 billion of unrecognized tax benefits, $2.3 billion has been recorded to other liabilities. We believe that it is reasonably possible that our unrecognized tax benefits will change in fiscal 2026 and also certain amounts of which may result in cash payment in fiscal 2026. Unrecognized tax benefits at September 28, 2025 included $168 million for tax positions that, if recognized, would impact the effective tax rate. The unrecognized tax benefits differ from the amount that would affect our effective tax rate primarily because the unrecognized tax benefits were included on a gross basis and did not reflect related receivables or secondary impacts, such as the federal deduction for state taxes, adjustments to deferred tax assets and the valuation allowance that might be required if our tax positions are sustained. The increase in unrecognized tax benefits on prior year tax positions in fiscal 2025 relates primarily to transfer pricing positions taken in a foreign jurisdiction. The increase in unrecognized tax benefits for current year tax positions for the periods presented was primarily due to expected refunds of Korean withholding tax previously paid (which such increase had an insignificant impact to our income tax provision). If successful, the refund will result in a corresponding reduction in U.S. foreign tax credits. At September 28, 2025, total interest and penalties related to unrecognized tax benefits accrued in other current liabilities and other liabilities was $384 million, with a corresponding noncurrent income taxes receivable of $269 million recorded in other assets for expected refunds of certain tax benefits.
We file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. We are no longer subject to U.S. federal income tax examinations for years prior to fiscal 2018. We are also subject to examination in other taxing jurisdictions in the U.S. and numerous foreign jurisdictions. These examinations are at various stages with respect to assessments, claims, deficiencies and refunds, many of which are open for periods after fiscal 2001.
Cash amounts paid for income taxes, net of refunds received, were $3.1 billion, $3.3 billion and $1.4 billion for fiscal 2025, 2024 and 2023, respectively.