v3.25.4
Income Taxes (Tables)
 12 Months Ended
Jan. 03, 2026
Income Tax Disclosure [Abstract]  
Income Before Income Taxes Income from continuing operations before income taxes is as follows:
(In millions)202520242023
U.S.$903 $739 $905 
Non-U.S.234 204 182 
Income from continuing operations before income taxes$1,137 $943 $1,087 
Income Tax Expense (Benefit)
Income tax expense is summarized as follows:
(In millions)202520242023
Current:
Federal$(7)$84 $267 
State8 21 18 
Non-U.S.58 61 72 
Total current59 166 357 
Deferred:
Federal165 (34)(181)
State(6)(24)1 
Non-U.S.(4)10 (12)
Total deferred155 (48)(192)
Total income tax expense (benefit):
Federal158 50 86 
State2 (3)19 
Non-U.S.54 71 60 
Total income tax expense$214 $118 $165 
Effective Income Tax Rate Reconciliation This standard has been adopted on a prospective basis and the new presentation of the U.S. Federal statutory income tax rate to our effective tax rate for 2025 is provided below.
2025
(Dollars in millions)AmountPercentage
U.S. Federal statutory income tax rate$239 21.0 %
State and local income taxes, net of Federal income tax effects*2 0.2 %
Foreign tax effects6 0.5 %
Effect of cross-border tax laws(2)(0.2)%
Tax credits - research and development(36)(3.2)%
Non-taxable or nondeductible items:
Share-based compensation29 2.6 %
Other6 0.5 %
Changes in unrecognized tax benefits:
Audit settlement(17)(1.5)%
Other3 0.3 %
Other adjustments(16)(1.4)%
Effective income tax rate$214 18.8 %
* State income taxes for Kansas and Texas comprise the majority (greater than 50%) of this category. In 2025, an $18 million benefit was recognized related to the enactment of a single sales factor apportionment in Kansas.
A reconciliation of the U.S. Federal statutory income tax rate to our effective income tax rate for prior years is provided below.
20242023
U.S. Federal statutory income tax rate21.0%21.0%
Increase (decrease) resulting from:
State income taxes, net of Federal tax benefit(0.2)%1.4%
Non-U.S. tax rate differential and foreign tax credits2.1%1.5%
Research and development tax credits(5.4)%(4.7)%
Uncertain tax positions release for 2012 to 2017 IRS audit(2.9)%—%
Foreign-derived intangible income deduction(1.7)%(3.2)%
Other, net(0.4)%(0.8)%
Effective income tax rate12.5%15.2%
Reconciliation of Unrecognized Tax Benefits A reconciliation of these unrecognized tax benefits is as follows:
(In millions)202520242023
Balance at beginning of year$215 $222 $231 
Additions for tax positions related to current year19 17 16 
Additions for tax positions of prior years— 4 3 
Reductions for tax positions of prior years(1)— (28)
Reductions for settlements(17)(28)— 
Balance at end of year$216 $215 $222 
Deferred Taxes
The significant components of our net deferred tax assets/(liabilities) are provided below:
(In millions)January 3,
2026		December 28,
2024
Capitalized research and development expenditures$459 $631 
U.S. operating loss and tax credit carryforwards (a)232 212 
Accrued liabilities (b)201 224 
Obligation for pension and postretirement benefits130 109 
Operating lease liabilities 102 93 
Non-U.S. operating loss and tax credit carryforwards (c)82 88 
Deferred compensation70 94 
Prepaid pension benefits(721)(562)
Property, plant and equipment, principally depreciation(186)(198)
Amortization of goodwill and other intangibles(157)(184)
Operating lease right-of-use assets(99)(90)
Valuation allowance on deferred tax assets(76)(82)
Other, net(25)(74)
Deferred taxes, net$12 $261 
(a)At January 3, 2026, U.S. operating loss and tax credit carryforward benefits of $184 million expire through 2045 if not utilized and $48 million may be carried forward indefinitely.
(b)Accrued liabilities include warranty reserves, self-insured liabilities and interest.
(c)At January 3, 2026, non-U.S. operating loss and tax credit carryforward benefits of $73 million may be carried forward indefinitely.
The following table presents the breakdown of our deferred taxes:
(In millions)January 3,
2026		December 28,
2024
Manufacturing group:
Deferred tax assets, net of valuation allowance$145 $394 
Deferred tax liabilities(123)(96)
Finance group – Deferred tax liabilities(10)(37)
Net deferred tax asset$12 $261