v3.25.4
Income taxes (Tables)
 12 Months Ended
Dec. 28, 2025
Income Tax Disclosure [Abstract]  
Provision for Income Taxes
The provision for taxes on income on continuing operations consists of:
(Dollars in Millions)202520242023
Currently payable:
U.S. taxes$1,1632,2002,705
International taxes3,0762,6043,090
Total currently payable4,2394,8045,795
Deferred:
U.S. taxes2,008(2,539)(3,440)
International taxes(470)356(619)
Total deferred1,538(2,183)(4,059)
Provision for taxes on income$5,7772,6211,736
Comparison of Income Taxes at Statutory Rate and Company's Effective Tax Rate
Below is a tabular rate reconciliation of the U.S. statutory income tax rate of 21% to the Company's effective income tax rate for the fiscal year 2025, pursuant to the new disclosure requirements of ASU 2023-09 (See Note 1 of the Consolidated Financial Statements):
(Dollars in Millions)2025
U.S. $15,254
International17,327
Earnings before taxes on income:32,581
Tax rates:
U.S. federal statutory rate6,84221.0%
State & local taxes:(1)
1620.5 
Foreign tax effects:(861)(2.7)
Ireland
Statutory tax rate difference between Ireland & U.S.(473)(1.5)
Other(11)(0.0)
Switzerland
Statutory tax rate difference between Switzerland & U.S.(607)(1.9)
Other2830.9 
All Other Jurisdictions(53)(0.2)
Effects of changes in tax laws or rates enacted in the current period: 1,0033.1 
OBBBA Deferred NCTI Remeasurement1,0033.1 
Effects of cross border tax laws:1,6014.9 
NCTI(2)
9993.1 
Subpart F5221.6 
Other800.2 
Tax credits: (2,455)(7.6)
NCTI foreign tax credits(2)
(1,324)(4.1)
Subpart F foreign tax credits(656)(2.0)
All other tax credits(475)(1.5)
Changes in valuation allowances:1360.4 
Nontaxable or nondeductible items:550.2 
Changes in unrecognized tax benefits:(111)(0.3)
Other adjustments:(595)(1.8)
Net tax benefit on ordinary losses(595)(1.8)
Effective Rate$5,77717.7 %
(1)Majority of state taxes are in the following states AL, CA, FL, IL, IN, KY, MA, MI, NJ, NY, PA, TN, VA, WI
(2)NCTI includes $(0.6) billion of accrued benefits as the Company has elected to account for NCTI under the deferred method. (See Note 1 to the Consolidated Financial Statements)
The below comparison table is a rate reconciliation of the U.S. statutory rate of 21% to the Company's effective tax rate for fiscal years 2024 and 2023:
(Dollars in Millions)20242023
U.S. $(458)(2,033)
International17,14517,095 
Earnings before taxes on income:$16,68715,062 
Tax rates:
U.S. statutory rate21.0 %21.0 
International operations(1)
(5.2)(8.1)
U.S. tax settlements1.0 (3.0)
U.S. taxes on international income(2)
(2.6)(0.3)
U.S. state taxes1.5 1.0 
Tax benefits on share-based compensation(0.6)(0.8)
All other0.6 1.7 
Effective Rate15.7 %11.5 
(1)International operations reflect the impacts of operations in jurisdictions with statutory tax rates different than the U.S., particularly Ireland, Switzerland, and Belgium, which is a favorable impact on the effective tax rate as compared with the U.S. statutory rate.
(2)Includes the net impact of the GILTI tax, the Foreign-Derived Intangible Income deduction and other foreign income that is taxable under the U.S. tax code as well as related foreign tax credits.
Temporary Differences and Carryforwards
Temporary differences and carryforwards at the end of fiscal years 2025 and 2024 were as follows:
2025 Deferred Tax2024 Deferred Tax
(Dollars in Millions)AssetLiabilityAssetLiability
Employee related obligations$54372
Stock based compensation651717
Depreciation of property, plant and equipment(929)(833)
Goodwill and intangibles(6,154)(3,261)
R&D capitalized for tax4,7524,398
Reserves & liabilities2,4334,444
Inventory related378371
Net operating loss & tax credit carryforwards3,5612,658
Undistributed foreign earnings1,718(2,969)2,668(1,492)
NCTI (Net CFC Tested Income)(2,495)(1,589)
Miscellaneous international620852
Miscellaneous U.S. 300346
Total deferred income taxes14,467(12,547)16,826(7,175)
Valuation allowances(1,837)(1,638)
Total deferred income taxes net of valuation allowances$12,630(12,547)15,188(7,175)
Summary of Valuation Allowance The following table summarizes the activity related to valuation allowances for continuing operations:
(Dollars in Millions)20252024
Beginning of year$1,6381,149
Provision129451
Utilization(70)—
Foreign currency translation90(46)
Net acquisitions / (dispositions/liquidations)5084
End of year$1,837$1,638
Schedule of Cash Flow, Supplemental Disclosures
The following table summarizes income taxes paid net of tax refunds:
(Dollars in Millions)202520242023
U.S. Federal(1)
$3,5773,8154,722
U.S. State and Local taxes169341236
Total U.S.3,7464,1564,958
Total Foreign(2)
2,7932,5583,616
Total income taxes paid net of tax refunds$6,5396,7148,574
(1)Includes TCJA foreign undistributed earnings payments of $2.5 billion, $2.0 billion and $1.5 billion in fiscal years 2025, 2024 and 2023, respectively
(2)Included in foreign income taxes paid net of refunds are payments made in 2025 to Ireland for $0.6 billion and Switzerland for $0.5 billion
Schedule of Unrecognized Tax Benefits Roll Forward
The following table summarizes the activity related to unrecognized tax benefits for continuing operations:
(Dollars in Millions)202520242023
Beginning of year$2,0202,4853,716
Increases related to current year tax positions87176239
Increases related to prior period tax positions925129244
Decreases related to prior period tax positions(160)(147)(781)
Settlements(10)(583)(880)
Lapse of statute of limitations(200)(40)(53)
End of year$2,6622,0202,485