INCOME TAXES (Tables)

12 Months Ended

May 31, 2026

Geographical Breakdown of Income Before Income Taxes

The following is a geographical breakdown of income before income taxes:


	Year Ended May 31,
(in millions)	2026		2025		2024
Domestic	$	8,693	$	4,376	$	3,023
Foreign		10,861		9,784		8,718
Income before income taxes	$	19,554	$	14,160	$	11,741

Components of Provision for Income Taxes

The provision for income taxes consisted of the following:


	Year Ended May 31,
(Dollars in millions)	2026			2025			2024
Current provision:
Federal	$	1,072		$	1,172		$	999
State		307			196			420
Foreign		2,005			1,986			1,994
Total current provision	$	3,384		$	3,354		$	3,413
Deferred benefit:
Federal	$	(1,783	)	$	(2,208	)	$	(2,020	)
State		(152	)		(202	)		(280	)
Foreign		1,018			773			161
Total deferred benefit	$	(917	)	$	(1,637	)	$	(2,139	)
Total provision for income taxes	$	2,467		$	1,717		$	1,274
Effective income tax rate	12.6%			12.1%			10.9%

Reconciliation of Differences Between Federal Statutory Tax Rate and Effective Tax Rate

The following table reconciles the provision for income taxes to the amount computed by applying the statutory U.S. federal income tax rate to income before income taxes for the year ended May 31, 2026:


(Dollars in millions)	Amount			Percent
U.S. federal statutory income tax rate	$	4,106		21.0%
Foreign tax effects		(77	)	-0.4%
Switzerland
Statutory tax rate difference between Switzerland and U.S.		(377	)	-1.9%
Other		21		0.1%
Malta
Statutory tax rate difference between Malta and U.S.		255		1.3%
Equity allowance		(546	)	-2.8%
Other		(78	)	-0.4%
Bermuda
Statutory tax rate difference between Bermuda and U.S.		(105	)	-0.5%
Income exclusion		(263	)	-1.4%
Other foreign jurisdictions		1,016		5.2%
Effect of changes in tax laws or rates enacted in the current period(1)		933		4.8%
Tax credits		(1,587	)	-8.1%
Federal research and development credit		(621	)	-3.2%
Foreign tax credits		(965	)	-4.9%
Other		(1	)	0.0%
Nontaxable or nondeductible items		(1,970	)	-10.1%
Stock-based compensation		(2,062	)	-10.6%
Other		92		0.5%
Changes in unrecognized tax benefits		847		4.3%
Other adjustments(2)		215		1.1%
Effective income tax rate	$	2,467		12.6%

(1)

Primarily related to the tax effects of enactment of the U.S. One, Big, Beautiful Bill Act.

(2)

Includes the tax effects of changes in valuation allowances, effect of cross-border tax laws and state taxes, net of federal benefit. California, Virginia and Missouri represent the majority of the state taxes net of federal benefit.


	Year Ended May 31,
(Dollars in millions)	2025			2024
U.S. federal statutory income tax rate	21.0%			21.0%
Tax provision at statutory rate	$	2,974		$	2,466
Foreign earnings at other than U.S. rates		(381	)		(262	)
State tax expense, net of federal benefit		128			81
Settlements and releases from judicial decisions and statute expirations, net		(149	)		(124	)
Tax contingency interest accrual, net		322			157
Domestic tax contingency, net		75			131
Federal research and development credit		(411	)		(372	)
Stock-based compensation		(801	)		(624	)
Realization of a one-time tax attribute		—			(235	)
Other, net		(40	)		56
Total provision for income taxes	$	1,717		$	1,274

Schedule of Cash Paid for Income Taxes, Net of Refunds Received, by Jurisdiction

Cash paid for income taxes, net of refunds received, by jurisdiction pursuant to the disclosure requirements of ASU 2023-09 for the year ended May 31, 2026 was as follows (in millions):


Federal	$	2,460
State(1)		249
Foreign
Korea		(262	)
Japan		203
India		193
Other		861
Total cash paid for income taxes, net of refunds received	$	3,704

(1)

No individual state accounted for more than 5%.

Components of Deferred Tax Liabilities and Assets

The components of our deferred tax assets and liabilities were as follows:


	May 31,
(in millions)	2026			2025
Deferred tax assets:
Accruals and allowances	$	1,195		$	790
Employee compensation and benefits		1,006			1,068
Differences in timing of revenue recognition		970			894
Lease liabilities		9,333			3,279
Basis of property, plant and equipment and intangible assets		6,882			7,800
Capitalized research and development		5,784			4,153
Tax credit and net operating loss carryforwards		6,602			5,857
Total deferred tax assets		31,772			23,841
Valuation allowance		(2,483	)		(1,962	)
Total deferred tax assets, net		29,289			21,879
Deferred tax liabilities:
Acquired intangible assets		(544	)		(920	)
GILTI deferred		(6,852	)		(6,949	)
ROU assets		(9,181	)		(3,207	)
Withholding taxes on foreign earnings		(424	)		(364	)
Other		(1,069	)		(191	)
Total deferred tax liabilities		(18,070	)		(11,631	)
Net deferred tax assets	$	11,219		$	10,248
Recorded as:
Non-current deferred tax assets	$	11,541		$	11,877
Non-current deferred tax liabilities		(322	)		(1,629	)
Net deferred tax assets	$	11,219		$	10,248

Gross Unrecognized Tax Benefits, Including Acquisitions

The aggregate changes in the balance of our gross unrecognized tax benefits, including acquisitions, were as follows:


	Year Ended May 31,
(in millions)	2026			2025			2024
Gross unrecognized tax benefits as of June 1	$	9,438		$	8,785		$	7,715
Increases related to tax positions from prior fiscal years		192			239			492
Decreases related to tax positions from prior fiscal years		(70	)		(98	)		(128	)
Increases related to tax positions taken during current fiscal year		931			846			889
Settlements with tax authorities		(171	)		(161	)		(46	)
Lapses of statutes of limitation		(216	)		(162	)		(129	)
Cumulative translation adjustments and other, net		22			(11	)		(8	)
Total gross unrecognized tax benefits as of May 31	$	10,126		$	9,438		$	8,785