v3.26.1
INCOME TAXES (Tables)
 12 Months Ended
May 31, 2026
Income Tax Disclosure [Abstract]  
Schedule of Income Before Income Taxes
Income before income taxes is as follows:
YEAR ENDED MAY 31,
(Dollars in millions)
202620252024
Income before income taxes:
United States$2,680 $3,220 $5,588 
Foreign1,220 665 1,112 
TOTAL INCOME BEFORE INCOME TAXES$3,900 $3,885 $6,700 
Schedule of Components of Income Tax Expense
The provision for income taxes is as follows:
YEAR ENDED MAY 31,
(Dollars in millions)
202620252024
Current:
United States
Federal$443 $358 $782 
State100 121 201 
Foreign345 475 514 
Total Current888 954 1,497 
Deferred:
United States
Federal(262)(135)(422)
State10 (12)(61)
Foreign156 (141)(14)
Total Deferred(96)(288)(497)
TOTAL INCOME TAX EXPENSE$792 $666 $1,000 
Schedule of Effective Income Tax Rate Reconciliation The following table presents a reconciliation from the U.S. statutory federal income tax rate to the effective income tax rate pursuant to ASU 2023-09:
(Dollars in millions)
YEAR ENDED MAY 31, 2026
U.S. federal statutory tax rate$819 21.0 %
State and local income taxes, net of federal income tax effects(1)
94 2.4 %
Foreign tax effects
China
Withholding taxes
83 2.1 %
Other
13 0.3 %
Mexico59 1.5 %
Other foreign jurisdictions
107 2.7 %
Effect of cross-border tax laws
Foreign-derived intangible income benefit(113)-2.9 %
Current Subpart F income179 4.6 %
Deferred Subpart F income, including foreign tax credits(120)-3.1 %
Foreign tax credits(353)-9.1 %
Other
11 0.3 %
Tax credits
Research and development tax credits(65)-1.7 %
Other credits
(1)— %
Nontaxable or nondeductible items
Stock-based compensation44 1.1 %
Other(28)-0.7 %
Changes in unrecognized tax benefits
52 1.3 %
Other adjustments
11 0.3 %
EFFECTIVE INCOME TAX RATE$792 20.3 %
(1)The state and local jurisdictions that contribute to the majority (greater than 50%) of the tax effect in this category include Pennsylvania, New York, California, New York City and Georgia for fiscal 2026.
The following table presents the required disclosures prior to the Company's adoption of ASU 2023-09 and reconciles the U.S. statutory federal income tax rate to the effective income tax rate as follows:
 YEAR ENDED MAY 31,
20252024
Federal income tax rate21.0 %21.0 %
State taxes, net of federal benefit2.0 %1.4 %
Foreign earnings1.1 %-2.5 %
U.S. tax regulations - foreign currency losses
-3.4 %0.0 %
Foreign-derived intangible income benefit-5.3 %-4.8 %
Stock-based compensation
1.5 %-0.5 %
Income tax audits and contingency reserves2.7 %1.8 %
U.S. research and development tax credit-2.1 %-2.1 %
Other, net-0.4 %0.6 %
EFFECTIVE INCOME TAX RATE17.1 %14.9 %
Schedule of Deferred Income Tax Assets and Liabilities
Deferred income tax assets and liabilities comprise the following as of: 
MAY 31,
(Dollars in millions)
20262025
Deferred tax assets:
Inventories
$90 $98 
Sales return reserves
175 205 
Deferred compensation
449 387 
Stock-based compensation313 285 
Reserves and accrued liabilities
70 143 
Operating lease liabilities427 458 
Intangibles198 217 
Capitalized research and development expenditures 996 923 
Net operating loss carry-forwards96 75 
Subpart F deferred tax421 315 
Other
267 212 
Total deferred tax assets3,502 3,318 
Valuation allowance(192)(51)
Total deferred tax assets after valuation allowance3,310 3,267 
Deferred tax liabilities:
Foreign withholding tax on undistributed earnings of foreign subsidiaries(129)(119)
Property, plant and equipment
(231)(225)
Right-of-use assets(343)(377)
Other
(14)(4)
Total deferred tax liabilities(717)(725)
NET DEFERRED TAX ASSET(1)
$2,593 $2,542 
(1)Of the total $2,593 million net deferred tax asset for the period ended May 31, 2026, $2,731 million was included within Deferred income taxes and other assets and $(138) million was included within Deferred income taxes and other liabilities on the Consolidated Balance Sheets. Of the total $2,542 million net deferred tax asset for the period ended May 31, 2025, $2,668 million was included within Deferred income taxes and other assets and $(126) million was included within Deferred income taxes and other liabilities on the Consolidated Balance Sheets.
Schedule of Unrecognized Tax Benefits Roll Forward
The following is a reconciliation of the changes in the gross balance of unrecognized tax benefits as of:
 MAY 31,
(Dollars in millions)
202620252024
Unrecognized tax benefits, beginning of the period$1,026 $990 $936 
Gross increases related to prior period tax positions14 11 35 
Gross decreases related to prior period tax positions
(17)(10)(13)
Gross increases related to current period tax positions
52 81 77 
Settlements(112)(5)(22)
Lapse of statute of limitations(20)(45)(24)
Changes due to currency translation10 4 1 
UNRECOGNIZED TAX BENEFITS, END OF THE PERIOD$953 $1,026 $990 
Schedule of Cash Paid for Income Taxes (Net of Refunds Received)
A summary of cash paid for income taxes (net of refunds received) in fiscal 2026 pursuant to ASU 2023-09 is as follows:
YEAR ENDED MAY 31,
(Dollars in millions)
2026
Federal(1)
$642 
State
126 
Foreign502 
China
85 
Mexico82 
Netherlands77 
Other
258 
TOTAL CASH PAID FOR INCOME TAXES
$1,270 
(1)Of the $642 million cash paid for U.S. federal income taxes, $268 million related to the final installment of transition tax on deemed repatriation of undistributed earnings of foreign subsidiaries related to the Tax Cuts and Jobs Act and $260 million related to estimated payments for the expected resolution with the IRS of certain U.S. federal income tax matters for fiscal years 2017 through 2019.