Income Taxes

12 Months Ended

Sep. 27, 2026

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The components of income from continuing operations before income taxes by U.S. and foreign jurisdictions were as follows (in millions):

	2026		2025		2024
United States	$	6,990	$	11,174	$	9,169
Foreign	2,424		1,489		1,167
	$	9,414	$	12,663	$	10,336

The components of the income tax provision from continuing operations were as follows (in millions):

	2026		2025		2024
Current provision:
Federal	$	405	$	1,682	$	1,306
State	14		7		3
Foreign (1)	431		981		805
	850		2,670		2,114
Deferred (benefit) provision:
Federal	(5,118)		4,373		(1,553)
State	—		(5)		(4)
Foreign (1)	54		84		(331)
	(5,064)		4,452		(1,888)
	$	(4,214)	$	7,122	$	226

(1) The foreign component of the income tax provision included foreign withholding taxes on royalty revenues included in U.S. earnings.

The following is a reconciliation of the expected statutory federal income tax provision to our actual income tax provision from continuing operations for fiscal 2026 (in millions, except percentages). A significant portion of our U.S. income qualifies for preferential treatment as FDDEI at a 13% effective tax rate.

	2026
Expected income tax provision at federal statutory tax rate (1)	$	1,977	21	%
Foreign tax effects (2):
China	230		2	%
Singapore	(195)		(2	%)
South Korea	173		2	%
Other foreign jurisdictions	167		2	%
Effect of cross-border tax laws:
Benefit from foreign-derived deduction eligible income (FDDEI)	(368)		(4	%)
Income from branches	360		4	%
Other	124		1	%
Tax credits:
Foreign tax credit	(752)		(8	%)
Research and development credits	(229)		(2	%)
Changes in valuation allowance	(5,781)		(61	%)
Nontaxable or nondeductible items	176		2	%
Other	(96)		(1	%)
	$	(4,214)	(45	%)

(1) Percentages may not sum due to rounding.

(2) Foreign tax effects in China and South Korea primarily relate to withholding tax and in Singapore primarily relate to non-resident source investment income.

The following is a reconciliation of the expected statutory federal income tax provision to our actual income tax provision from continuing operations for fiscal 2025 and 2024 (in millions):

	2025			2024
Expected income tax provision at federal statutory tax rate	$	2,659		$	2,171
Change in valuation allowance on federal deferred tax assets	5,724			—
Benefit from FDDEI deduction	(1,227)			(1,181)
Benefit related to research and development tax credits	(237)			(259)
Excess tax (benefit) deficiency associated with share-based awards	(120)			(176)
Benefit related to the transfer of intellectual property between foreign subsidiaries	(8)			(317)
Other	331			(12)
	$	7,122		$	226
Effective tax rate	56		%	2		%

In the fourth quarter of fiscal 2025, tax reform legislation included in the One Big Beautiful Bill Act (OBBB) was enacted in the United States. The OBBB included significant corporate tax reforms, including changes to the foreign-derived deduction eligible income (FDDEI) regime and changes allowing domestic research and development (R&D) expenditures to be deducted as incurred beginning in fiscal 2026 (under prior law such expenditures were capitalized and amortized over five years). As a result, we expected to be perpetually subject to corporate alternative minimum tax (CAMT) and established a $5.7 billion valuation allowance on our federal deferred tax assets in fiscal 2025.

In the second quarter of fiscal 2026, the U.S. Department of Treasury and the Internal Revenue Service issued Notice 2026-07, which, among other items, allows us to reduce CAMT by certain previously capitalized domestic R&D expenditures. As a result, we no longer expect to be subject to CAMT in the foreseeable future, and therefore, we now expect to realize our existing federal deferred tax assets. Accordingly, we released our valuation allowance on our federal deferred tax assets resulting in a $5.7 billion income tax benefit in the second quarter of fiscal 2026. Changes in future taxable income, tax laws and other factors may change our determination regarding whether we will be able to realize our deferred tax assets.

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, $2.7 billion and $2.2 billion were recorded as noncurrent income taxes receivable (included in other assets) at September 27, 2026 and September 28, 2025, respectively, and $3.0 billion and $2.6 billion were recorded as a noncurrent liability for uncertain tax benefits (included in other liabilities) at September 27, 2026 and September 28, 2025, respectively.

Our cash paid for income taxes, net of refunds received, for fiscal 2026 was as follows (in millions):

	2026
Federal	$	826
State	19
Foreign	799
Cash paid for income taxes, net of refunds received	$	1,644

Our cash paid for income taxes, net of refunds received, during fiscal 2025 and 2024 were $3.1 billion and $3.3 billion, respectively.

We had deferred tax assets and deferred tax liabilities as follows (in millions):

	September 27, 2026		September 28, 2025
Capitalized research and development expenditures	$	3,737	$	4,194
Unused tax credits	2,912		2,527
Customer incentives	620		790
Accrued liabilities and reserves	425		410
Unused net operating losses	342		708
Other	1,417		1,069
Total gross deferred tax assets	9,453		9,698
Valuation allowance	(2,448)		(8,016)
Total net deferred tax assets	7,005		1,682
Intangible assets	(425)		(367)
Unrealized gains on other investments and marketable securities	(388)		(212)
Operating lease assets	(275)		(256)
Other	(283)		(235)
Total deferred tax liabilities	(1,371)		(1,070)
Net deferred tax assets	$	5,634	$	612
Reported as:
Non-current deferred tax assets	$	5,783	$	743
Non-current deferred tax liabilities (1)	(149)		(131)
	$	5,634	$	612

(1) Non-current deferred tax liabilities were included in other liabilities in the consolidated balance sheets.

At September 27, 2026, we had unused foreign net operating loss carryforwards of $1.0 billion, of which substantially all may be carried forward indefinitely, unused state net operating loss carryforwards of $749 million expiring from 2027 through 2037 and unused federal net operating loss carryforwards of $135 million, of which $70 million expire from 2027 through 2037 and $65 million may be carried forward indefinitely. At September 27, 2026, we had unused state tax credits of $2.3 billion, of which substantially all may be carried forward indefinitely, unused federal tax credits of $485 million expiring from 2028 through 2035 and unused tax credits of $106 million in foreign jurisdictions expiring from 2038 through 2046.

At September 27, 2026, we have provided valuation allowances on certain state tax credits, foreign deferred tax assets and state net operating losses of $2.3 billion, $92 million and $43 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 2026, 2025 and 2024 follows (in millions):

	2026		2025		2024
Beginning balance of unrecognized tax benefits	$	2,668	$	2,450	$	2,296
Additions based on prior year tax positions	145		158		2
Reductions for prior year tax positions and lapse in statute of limitations	—		(93)		(1)
Additions for current year tax positions	180		153		153
Ending balance of unrecognized tax benefits	$	2,993	$	2,668	$	2,450

Of the $3.0 billion of unrecognized tax benefits at September 27, 2026, $2.6 billion has been recorded to other liabilities. Unrecognized tax benefits at September 27, 2026 included $186 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 adjustments to the federal foreign tax credit that might be required if our tax positions are sustained. 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 27, 2026, total interest and penalties related to unrecognized tax benefits accrued in other current liabilities and other liabilities was $501 million, with a corresponding noncurrent income taxes receivable of $372 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.