Income Taxes

6 Months Ended

Jun. 28, 2025

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The provision for income taxes in the accompanying statements of income differs from the provision calculated by applying the statutory federal income tax rate to income before provision for income taxes due to the following:

	Six months ended
(In millions)	June 28, 2025			June 29, 2024
Statutory federal income tax rate	21		%	21		%
Provision for income taxes at statutory rate	$	699		$	704
Increases (decreases) resulting from:
Foreign rate differential	(72)			(76)
Income tax credits	(99)			(141)
Global intangible low-taxed income	23			25
Foreign-derived intangible income	(53)			(47)
Excess tax benefits from stock options and restricted stock units	(9)			(45)
Provision for (reversal of) tax reserves, net	(28)			195
Intra-entity transfers	(153)			(102)
Domestication transaction	(125)			—
Provision for (reversal of) valuation allowances, net	(85)			(67)
Withholding taxes	7			9
Tax return reassessments and settlements	30			(35)
State income taxes, net of federal tax	43			39
Equity method investments	(2)			(45)
Other, net	12			(4)
Provision for/(benefit from) income taxes	$	187		$	408

During the first quarter of 2025, the company recorded a deferred tax benefit of $125 million resulting from the recognition of a tax attribute related to a domestication transaction. During the second quarter of 2025, the company recorded a deferred tax benefit of $153 million related to capital losses generated as part of intra-entity transactions and a $93 million benefit in jurisdictions where the deferred tax assets are now expected to be realized due to forecasted income.

During the first quarter of 2024, the company recorded a tax reserve and associated interest of $240 million related to the potential settlement of international tax audits for tax years 2009 through 2016, which were settled during 2024. During the second quarter of 2024, the company recorded a benefit of $183 million, primarily in jurisdictions where the deferred tax assets are now expected to be realized due to forecasted income.

The company has operations and a taxable presence in approximately 70 countries outside the U.S. The company's effective income tax rate differs from the U.S. federal statutory rate each year due to certain operations that are subject to tax incentives, state and local taxes, and foreign taxes that are different than the U.S. federal statutory rate.

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was enacted. The OBBBA includes a broad range of provisions, such as the permanent extension of certain otherwise expiring provisions, modifications to the international tax framework and the reinstatement of favorable tax treatment for certain business provisions. While most of the changes made by the OBBBA are effective in future tax years, some of its provisions are effective in 2025. We are currently evaluating its impact on our consolidated financial statements.

Unrecognized Tax Benefits

As of June 28, 2025, the company had $0.52 billion of unrecognized tax benefits substantially all of which, if recognized, would reduce the effective tax rate. A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:

(In millions)	2025
Balance at beginning of year	$	525
Additions for tax positions of current year	22
Reductions for tax positions of prior years	(8)
Closure of tax years	(19)
Settlements	(1)
Balance at end of period	$	520