Income Taxes |
6 Months Ended |
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Jun. 29, 2025 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Income taxes The worldwide effective income tax rates for the fiscal six months of 2025 and 2024 were 17.8% and 16.1%, respectively. The increase in the worldwide effective tax rate is primarily due to more income in higher tax jurisdictions, specifically in the U.S. In the fiscal six months of 2025 the Company reversed previously accrued reserves of approximately $7.0 billion for the Talc settlement proposal versus a charge of $3.0 billion recorded in the fiscal six months of 2024 for the Talc settlement proposal. Both were recorded at an effective rate for U.S. federal and state tax of approximately 22% (for further information see Note 11 to the Consolidated Financial Statements). Additionally in the fiscal six months of 2025, the effective tax rate benefited primarily from changes in uncertain international tax positions due to expiration of statute of limitations. Subsequent to the end of the fiscal second quarter, on July 4, 2025, the United States enacted into law new tax legislation, the One Big Beautiful Bill Act, (OBBBA). The OBBBA includes provisions modifying the corporate income tax code, including the immediate expensing of domestic research and development expenditures for tax purposes, 100% bonus depreciation for qualified assets, and an increase in the statutory tax rate on foreign earnings from 10.5% to 12.6% (effective in the fiscal year 2026). The law also renamed the provision for taxes on foreign earnings from Global Intangible Low-Taxed Income (GILTI) to Net Controlled Foreign Corporation (CFC) Tested Income (NCTI). The Company has elected to account for GILTI, now NCTI, under the deferred method. The deferred tax amounts recorded are based on the evaluation of temporary differences that are expected to reverse as NCTI is incurred in future periods. As a result, the Company will remeasure its deferred tax balances related to NCTI for the changes in the tax rate and will record an adjustment to this balance in the fiscal third quarter. The Company is still assessing this impact but is estimating this one-time re-measurement cost to be approximately $1.0 billion. As of June 29, 2025, the Company had approximately $2.2 billion of liabilities from unrecognized tax benefits. The Company conducts business and files tax returns in numerous countries and currently has tax audits in progress in a number of jurisdictions. With respect to the United States, the Internal Revenue Service has completed its audit for the tax years through 2016 and the audit for tax years 2017 through 2020 is ongoing. In other major jurisdictions where the Company conducts business, the years that remain open to tax audit go back to the year 2013. The Company believes it is possible that tax audits may be completed over the next twelve months by taxing authorities in some jurisdictions outside of the United States.
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