v3.25.2
Income Taxes
 12 Months Ended
Apr. 25, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The income tax provision is based on income before income taxes reported for financial statement purposes. The components of income before income taxes, based on tax jurisdiction, are as follows:
 Fiscal Year
(in millions)202520242023
U.S.$1,037 $750 $1,295 
International4,591 4,087 4,069 
Income before income taxes$5,628 $4,837 $5,364 
The income tax provision consists of the following:
 Fiscal Year
(in millions)202520242023
Current tax expense:   
U.S.$583 $756 $1,303 
International692 905 530 
Total current tax expense1,275 1,661 1,833 
Deferred tax (benefit) expense:
U.S.(322)(435)(336)
International(17)(93)83 
Net deferred tax benefit(339)(528)(253)
Income tax provision
$936 $1,133 $1,580 
Tax assets (liabilities), shown before jurisdictional netting of deferred tax assets (liabilities), are comprised of the following:
(in millions)April 25, 2025April 26, 2024
Deferred tax assets:  
Net operating loss, capital loss, and credit carryforwards$11,252 $11,775 
Intangible assets2,800 2,858 
Capitalization of research and development1,420 1,255 
Other accrued liabilities450 404 
Accrued compensation363 374 
Stock-based compensation149 147 
Inventory144 138 
Deferred revenue213 172 
Lease obligations 165 157 
Federal and state benefit on uncertain tax positions32 21 
Interest limitation479 608 
Unrealized gain on available-for-sale securities and derivative financial instruments56 13 
Other421 355 
Gross deferred tax assets17,946 18,277 
Valuation allowance(12,668)(13,271)
Total deferred tax assets5,2775,006
Deferred tax liabilities:  
Intangible assets(1,238)(1,406)
Realized loss on derivative financial instruments(67)(70)
Right of use leases(159)(149)
Accumulated depreciation(114)(110)
Outside basis difference of subsidiaries(71)(90)
Pension and post-retirement benefits(35)(45)
Other(90)(90)
Total deferred tax liabilities(1,773)(1,960)
Prepaid income taxes719 520 
Income tax receivables 464 406 
Tax assets, net$4,687 $3,972 
Reported as (after valuation allowance and jurisdictional netting):  
Other current assets$1,050 $830 
Tax assets4,040 3,657 
Deferred tax liabilities(403)(515)
Tax assets, net$4,687 $3,972 
No deferred taxes have been provided on the approximately $88.6 billion and $86.3 billion of undistributed earnings of the Company’s subsidiaries at April 25, 2025 and April 26, 2024, respectively, since these earnings have been, and under current plans will continue to be, permanently reinvested in these subsidiaries. Due to the number of legal entities and jurisdictions involved, the complexity of the legal entity structure of the Company, and the complexity of the tax laws in the relevant jurisdictions, the Company believes it is not practicable to estimate, within any reasonable range, the amount of additional taxes which may be payable upon distribution of these undistributed earnings.
At April 25, 2025, the Company had approximately $10.8 billion of tax effected net operating loss carryforwards in certain non-U.S. jurisdictions, of which $4.8 billion have no expiration, and the remaining $6.0 billion will expire during fiscal years 2026 through 2045. Included in these net operating loss carryforwards are $3.9 billion of tax effected net operating losses generated in fiscal year 2008 as a result
of the receipt of a favorable tax ruling from certain non-U.S. taxing authorities; and $4.9 billion of tax effected net operating losses generated during fiscal year 2023 as a result of an intercompany reorganization. The Company has recorded a full valuation allowance against these net operating losses, as management does not believe that it is more likely than not that these net operating losses will be utilized. Certain of the remaining non-U.S. net operating loss carryforwards of $2.0 billion have a valuation allowance recorded against the carryforwards, as management does not believe that it is more likely than not that these net operating losses will be utilized.
At April 25, 2025, the Company had $53 million of tax effected U.S. federal net operating loss carryforwards, of which $35 million have no expiration. The remaining loss carryforwards will expire during fiscal years 2026 through 2036. For U.S. state purposes, the Company had $84 million of tax effected net operating loss carryforwards at April 25, 2025, $12 million of which have no expiration. The remaining U.S. state loss carryforwards will expire during fiscal years 2026 through 2044.
At April 25, 2025, the Company also had $313 million of tax credits available to reduce future income taxes payable, of which $136 million have no expiration. The remaining credits will expire during fiscal years 2026 through 2042.
The Company has established valuation allowances of $12.7 billion and $13.3 billion at April 25, 2025 and April 26, 2024, respectively, primarily related to the uncertainty of the utilization of certain deferred tax assets which are primarily comprised of tax loss and credit carryforwards in various jurisdictions. The decrease in the valuation allowance during fiscal year 2025 is primarily related to a decrease in the Luxembourg tax rate applied to previously recorded deferred tax assets and associated valuation allowances and current year utilization of attributes with a full valuation allowance due to certain intercompany transactions. These valuation allowances would result in a reduction to the income tax provision in the consolidated statements of income if they are ultimately not required.
The Company’s effective income tax rate varied from the U.S. federal statutory tax rate as follows:
 Fiscal Year
 202520242023
U.S. federal statutory tax rate21.0 %21.0 %21.0 %
Increase (decrease) in tax rate resulting from:   
U.S. state taxes, net of federal tax benefit0.7 0.2 0.1 
Research and development credit(1.8)(2.2)(1.9)
Puerto Rico excise tax— — (1.0)
International(6.5)(6.7)(8.0)
Stock based compensation0.3 0.3 0.2 
Uncertain tax positions and interest1.4 1.3 1.2 
Base erosion anti-abuse tax— 0.3 — 
Foreign derived intangible income benefit(1.5)(1.7)(1.2)
Certain tax adjustments1.1 6.2 17.0 
U.S. tax on foreign earnings1.5 3.5 2.5 
Other, net0.4 1.2 (0.4)
Effective tax rate16.6 %23.4 %29.5 %
The Organization for Economic Co-operation and Development (OECD) published Pillar Two Model Rules defining the global minimum tax, which calls for the taxation of large multinational corporations at a minimum rate of 15% in each jurisdiction in which the group operates. The OECD has since issued administrative guidance providing transition and safe harbor rules around the implementation of the Pillar Two Global Minimum Tax. A number of countries, including Ireland, have enacted legislation to implement the core elements of Pillar Two, which were effective for Medtronic in fiscal year 2025.
The Israeli Central-Lod District Court issued its decision in Medtronic Ventor Technologies Ltd (Ventor) v. Kfar Saba Assessing Office in June 2023. The court determined that there was a deemed taxable transfer of intellectual property. As a result, the Company recorded a $187 million income tax charge during fiscal year 2024 and filed an appeal with the Supreme Court of Israel.
During fiscal year 2025, the cost from certain tax adjustments of $62 million, recognized in income tax provision in the consolidated statements of income, relates to amortization of the previously established deferred tax assets from intercompany intellectual property transactions.
During fiscal year 2024, the net cost from certain tax adjustments of $299 million, recognized in income tax provision in the consolidated statements of income, included the following:
•A cost of $187 million associated with a reserve adjustment related to the Israeli Central-Lod District Court decision with respect to a deemed taxable transfer of intellectual property.
•A cost of $124 million related to a change in valuation allowance on previously recorded net operating losses.
•A benefit of $95 million related to a Swiss Cantonal tax rate change on previously recorded deferred tax assets.
•A cost of $50 million associated with the amortization of the previously established deferred tax assets from intercompany intellectual property transactions.
•A cost of $33 million associated with a change in the Company’s permanent reinvestment assertion on certain historical earnings.
During fiscal year 2023, the net benefit from certain tax adjustments of $910 million, recognized in income tax provision in the consolidated statements of income, included the following:
•A net cost of $764 million associated with the August 2022 U.S. Tax Court (Tax Court) Opinion on the previously disclosed litigation regarding the allocation of income between Medtronic, Inc. and its wholly-owned subsidiary operating in Puerto Rico for fiscal years 2005 and 2006 (Opinion). While the Opinion rejected the IRS’s position and the Tax Court determined the methodology advanced by Medtronic was appropriate for purposes of determining the intercompany royalty rate between Puerto Rico and the U.S., it determined that the royalty rate should be higher, thereby increasing income allocated to the U.S. and consequently subject to U.S. tax. This case relates only to fiscal years 2005 and 2006. The Company has assumed the Tax Court findings will be applied for all years following fiscal year 2006.
•A cost of $55 million related to the disallowance of certain interest deductions.
•A cost of $30 million related to the change in reporting currency for certain carryover attributes.
•A cost of $28 million associated with the amortization of the previously established deferred tax assets from intercompany intellectual property transactions.
•A net cost of $33 million primarily associated with the sale of half of the Company’s RCS business.
Currently, the Company’s operations in Puerto Rico, Singapore, Dominican Republic, Costa Rica, and China have various tax holidays and tax incentive grants. The tax reductions, inclusive of Pillar Two global minimum tax impacts, as compared to the local statutory rate favorably impacted earnings by $294 million, $229 million, and $115 million in fiscal years 2025, 2024, and 2023, respectively, and diluted earnings per share by $0.23, $0.17, and $0.09, in fiscal years 2025, 2024, and 2023, respectively. The tax holidays are conditional upon the Company meeting certain thresholds required under statutory law. The tax incentive grants, unless extended, will expire between fiscal years 2026 and 2049. The tax incentive grants which expired during fiscal year 2025 did not have a material impact on the Company's consolidated financial statements.
The Company had $2.9 billion, $2.8 billion, and $2.7 billion of gross unrecognized tax benefits at April 25, 2025, April 26, 2024, and April 28, 2023, respectively. A reconciliation of the beginning and ending amount of unrecognized tax benefits for fiscal years 2025, 2024, and 2023 is as follows:
 Fiscal Year
(in millions)202520242023
Gross unrecognized tax benefits at beginning of fiscal year$2,824 $2,682 $1,661 
Gross increases:   
Prior year tax positions13 121 980 
Current year tax positions93 85 89 
Gross decreases:   
Prior year tax positions(8)(2)(12)
Settlements(5)(55)(4)
Statute of limitation lapses(15)(7)(32)
Gross unrecognized tax benefits at end of fiscal year2,902 2,824 2,682 
Cash advance paid to taxing authorities(934)(934)(918)
Gross unrecognized tax benefits at end of fiscal year, net of cash advance$1,968 $1,890 $1,764 
If all of the Company’s unrecognized tax benefits at April 25, 2025, April 26, 2024, and April 28, 2023 were recognized, $2.7 billion, $2.7 billion, and $2.5 billion would impact the Company’s effective tax rate, respectively. Although the Company believes that it has adequately reserved for liabilities resulting from tax assessments by taxing authorities, positions taken by these tax authorities could have a material impact on the Company’s effective tax rate in future periods. The Company has recorded gross unrecognized tax benefits, net of cash advance, of $1.9 billion as a noncurrent liability. The Company estimates that within the next 12 months it is reasonably possible that its uncertain tax positions, excluding interest, could decrease by as much as $17 million, net as a result of statute of limitation lapses.
The Company recognizes interest and penalties related to income tax matters in income tax provision in the consolidated statements of income and records the liability in the current or noncurrent accrued income taxes in the consolidated balance sheets, as appropriate. During fiscal years 2025, 2024, and 2023, the Company recognized gross interest expense of $55 million, $134 million, and $86 million, respectively, in income tax provision in the consolidated statements of income. The Company had $74 million, $19 million, and $61 million of accrued gross interest and penalties at April 25, 2025, April 26, 2024, and April 28, 2023, respectively.
The Company reserves for uncertain tax positions related to unresolved matters with the IRS and other taxing authorities. These reserves are subject to a high degree of estimation and management judgment. Resolution of these significant unresolved matters, or positions taken by the IRS or other tax authorities during future tax audits, could have a material impact on the Company’s financial results in future periods. The Company continues to believe that its reserves for uncertain tax positions are appropriate and that it has meritorious defenses for its tax filings and will vigorously defend them during the audit process, appellate process, and through litigation in courts, as necessary.
The major tax jurisdictions where the Company conducts business which remain subject to examination are as follows:
JurisdictionEarliest Year Open
United States - federal and state2005
Australia2023
Brazil2018
Canada2013
China2015
Costa Rica2021
Dominican Republic2021
France2022
Germany2017
India2002
Ireland2021
Israel2010
Italy2019
Japan2022
Korea2022
Luxembourg2020
Mexico2019
Puerto Rico2014
Singapore2020
Switzerland2010
United Kingdom2021
See Note 18 for additional information regarding the status of current tax audits and proceedings.