v3.26.1
Income Taxes
 12 Months Ended
Mar. 31, 2026
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
On July 4, 2025, the United States enacted the One Big Beautiful Bill Act (“OBBB”) which extended or modified certain corporate tax provisions under the 2017 Tax Cuts and Jobs Act (“TCJA”). The OBBB modified certain business deductions, including allowing for immediate expensing of U.S. research & development expenditures, effective in our current fiscal year. The OBBB also modified various international tax provisions which were set to change or expire after 2025 under the TCJA. Such modifications, including U.S. taxation of profits derived from foreign operations and associated foreign tax credit limitations, are effective in our fiscal year 2027. The changes resulting from the tax provisions of OBBB are not expected to have a material impact on our results of operations.

The European Union and other countries, including Switzerland, have enacted, or have committed to enact global minimum taxes, commonly referred to as Pillar II, as proposed by the Organization for Economic Cooperation and Development (“OECD”), effective with our fiscal year 2025. Pillar II in the relevant countries where we operate did not have a material impact on our tax provision. On January 5, 2026, the OECD published details of a side-by-side package for the Pillar II global minimum tax rules. The package includes an extension of the transitional safe harbor and new permanent safe harbor rules, including the exemption of U.S.-parented multinationals from certain Pillar II global minimum taxes effective in our fiscal year 2027. We do not expect the package to have material impact on our financial results and will continue to monitor legislative updates in our operating jurisdictions.

The components of our income before provision for income taxes for the fiscal years ended March 31, 2026, 2025, and 2024 are as follows (in millions):
 Year Ended March 31,
 202620252024
Domestic$265 $447 $437 
Foreign915 1,158 1,152 
Income before provision for income taxes$1,180 $1,605 $1,589 
Provision for income taxes for the fiscal years ended March 31, 2026, 2025, and 2024 consisted of (in millions):
 CurrentDeferredTotal
Year Ended March 31, 2026
Federal$137 $(29)$108 
State20 (7)13 
Foreign146 26 172 
$303 $(10)$293 
Year Ended March 31, 2025
Federal$369 $(136)$233 
State53 (28)25 
Foreign102 124 226 
$524 $(40)$484 
Year Ended March 31, 2024
Federal$138 $85 $223 
State20 9 29 
Foreign76 (12)64 
$234 $82 $316 
The differences between the statutory tax rate and our effective tax rate for the fiscal year ended March 31, 2026 after the adoption of ASU 2023-09 are as follows:
 Year Ended March 31, 2026
 AmountPercent
Statutory federal tax expense rate$248 21.0 %
State and local income taxes, net of federal benefit 3 0.3 %
Foreign tax effects
Singapore
Nontaxable interest income(76)(6.6)%
Statutory income tax rate differential(18)(1.5)%
Switzerland
Statutory income tax rate differential(19)(1.6)%
Other foreign jurisdictions36 3.1 %
Effect of cross-border tax laws (a)
73 6.2 %
Research and development tax credits(37)(3.1)%
Changes in unrecognized tax benefits (b)
77 6.5 %
Other adjustments (c)
6 0.5 %
Effective tax rate$293 24.8 %
(a) Effect of cross-border tax laws are presented on a net basis, primarily related to global intangible low-taxed income.
(b) Changes in unrecognized tax benefits are presented on an aggregated basis for all jurisdictions.
(c) Includes change in valuation allowances, and nontaxable or nondeductible items.

The differences between the statutory tax rate and our effective tax rate, expressed as a percentage of income before provision for income taxes, for the fiscal years ended March 31, 2025, and 2024 prior to the adoption of ASU 2023-09 were as follows:
 Year Ended March 31,
 20252024
Statutory federal tax expense rate21.0 %21.0 %
State taxes, net of federal benefit0.9 %1.1 %
Differences between statutory rate and foreign effective tax rate3.8 %2.9 %
Research and development credits(2.3)%(2.4)%
Swiss valuation allowance3.2 %(0.3)%
Effect of change in enacted tax rate— %(5.8)%
Non-deductible stock-based compensation3.2 %2.8 %
Other0.4 %0.6 %
Effective tax rate30.2 %19.9 %
During the fiscal year ended March 31, 2026, we recognized $24 million of tax benefit from higher excess stock-based compensation in various jurisdictions. Excluding the effect of the excess stock-based compensation, the effective tax rate for fiscal year 2026 would have been 26.9 percent.

During the fiscal year ended March 31, 2025, we recognized a $51 million tax charge to increase the valuation allowance on Swiss deferred tax assets as a result of various factors including our business operations, geographical income mix, and an increase in the Swiss interest rates. Excluding the effect of the change in valuation allowance, the effective tax rate for fiscal year 2025 would have been 27.0 percent.

During the fiscal year ended March 31, 2024, we recognized a $92 million tax benefit to remeasure our Swiss deferred tax assets as a result of an increase in the Swiss statutory tax rate. In addition, we recognized a lower period cost for U.S. tax on our non-U.S. earnings, including a cumulative one-time benefit, due to R&D capitalization guidance issued by the U.S. Treasury during the fiscal year. Excluding the effects of these items, the effective tax rate for fiscal year 2024 would have been 26.7 percent.
Income taxes paid, net of refunds received, for the fiscal year ended March 31, 2026 were as follows (in millions):
 Year Ended March 31, 2026
U.S. federal$91 
U.S. state and local19 
Foreign
        Canada - British Columbia20 
        Canada - federal15 
        Other56 
Income taxes paid, net of refunds$201 

Income taxes paid, net of refunds received, for the fiscal years ended March 31, 2025 and 2024 were $404 million and $300 million, respectively.

Our foreign subsidiaries are generally subject to U.S. tax, and to the extent earnings from these subsidiaries can be repatriated without a material tax cost, such earnings will not be indefinitely reinvested. As of March 31, 2026, approximately $796 million of our cash and cash equivalents were domiciled in foreign tax jurisdictions. All of our foreign cash is available for repatriation without a material tax cost.
The components of net deferred tax assets, as of March 31, 2026 and 2025 consisted of (in millions):
 As of March 31,
 20262025
Deferred tax assets:
Accruals, reserves and other expenses$239 $227 
Tax credit carryforwards250 235 
Research and development capitalization537 523 
Stock-based compensation42 43 
Amortization and depreciation15 — 
Net operating loss and capital loss carryforwards544 450 
Swiss intra-entity tax asset1,355 1,485 
Total2,982 2,963 
Valuation allowance(544)(534)
Deferred tax assets, net of valuation allowance2,438 2,429 
Deferred tax liabilities:
Amortization and depreciation— (7)
Other(6)(3)
Total(6)(10)
Deferred tax assets, net of valuation allowance and deferred tax liabilities$2,432 $2,419 
As of March 31, 2026, we have net operating loss carry forwards of approximately $3.6 billion of which approximately $40 million is attributable to various acquired companies. The net operating loss carry forwards include $3.6 billion related to Switzerland and $52 million related to U.S. states and other foreign jurisdictions. Substantially all of these carryforwards, if not fully realized, will begin to expire in fiscal year 2027. Switzerland has a seven-year carryforward period and does not permit the carry back of losses. We also have U.S. federal credit carryforwards of $15 million and California credit carryforwards of $224 million. The California tax credit carryforwards can be carried forward indefinitely.
As of March 31, 2026, we maintained a total valuation allowance of $544 million related to certain U.S. state deferred tax assets, Swiss deferred tax assets, and foreign capital loss carryovers, due to uncertainty about the future realization of these assets.
The total unrecognized tax benefits as of March 31, 2026, 2025, and 2024 were $677 million, $688 million and $804 million, respectively. A reconciliation of the beginning and ending balance of unrecognized tax benefits is summarized as follows (in millions):
Balance as of March 31, 2023$867 
Increases in unrecognized tax benefits related to prior year tax positions14 
Decreases in unrecognized tax benefits related to prior year tax positions(173)
Increases in unrecognized tax benefits related to current year tax positions97 
Reductions in unrecognized tax benefits due to lapse of applicable statute of limitations(2)
Changes in unrecognized tax benefits due to foreign currency translation1 
Balance as of March 31, 2024804 
Increases in unrecognized tax benefits related to prior year tax positions18 
Decreases in unrecognized tax benefits related to prior year tax positions(214)
Increases in unrecognized tax benefits related to current year tax positions94 
Decreases in unrecognized tax benefits related to settlements with taxing authorities(12)
Reductions in unrecognized tax benefits due to lapse of applicable statute of limitations(2)
Balance as of March 31, 2025688 
Increases in unrecognized tax benefits related to prior year tax positions41 
Decreases in unrecognized tax benefits related to prior year tax positions(22)
Increases in unrecognized tax benefits related to current year tax positions63 
Decreases in unrecognized tax benefits related to settlements with taxing authorities(94)
Reductions in unrecognized tax benefits due to lapse of applicable statute of limitations(5)
Changes in unrecognized tax benefits due to foreign currency translation6 
Balance as of March 31, 2026$677 
As of March 31, 2026, approximately $556 million of the unrecognized tax benefits would affect our effective tax rate, a portion of which would be impacted by a valuation allowance.
Interest and penalties related to estimated obligations for tax positions taken in our tax returns are recognized in income tax expense in our Consolidated Statements of Operations. The combined amount of accrued interest and penalties related to tax positions taken on our tax returns and included in non-current other liabilities was approximately $154 million as of March 31, 2026 and $127 million as of March 31, 2025.
We file income tax returns in the United States, including various state and local jurisdictions. As of March 31, 2026, our subsidiaries file tax returns in various foreign jurisdictions, including Canada, Germany, South Korea, Switzerland, and the United Kingdom. As of the period ended March 31, 2026, we remain subject to income tax examination in these jurisdictions, including the United States for fiscal years after 2017, Canada for fiscal years after 2015, Germany for fiscal years after 2019, South Korea for fiscal years after 2018, Switzerland for fiscal years after 2015, and the United Kingdom for fiscal years after 2021.
We are currently under income tax examination in various jurisdictions, including the United States for fiscal years 2018 through 2022.
The timing and potential resolution of income tax examinations is highly uncertain. While we continue to measure our uncertain tax positions, the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ materially from the amounts accrued.
It is also reasonably possible that a material reduction of unrecognized tax benefits may occur within the next 12 months, impacting our effective tax rate. The actual amount could vary significantly depending on the ultimate timing and nature of any settlements and tax interpretations.