v3.26.1
Income Taxes
 6 Months Ended
Jun. 27, 2026
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The provision for income taxes in the accompanying statements of income differs from the provision calculated by applying the statutory federal income tax rate to income before provision for income taxes due to the following:
Six months ended
(Dollars in millions)June 27, 2026June 28, 2025
U.S. federal statutory tax rate$768 21.0 %$699 21.0 %
State and local income taxes, net of federal income tax effect44 1.2 %43 1.3 %
Foreign tax effects(431)(11.8)%(73)(2.2)%
Effect of changes in tax laws or rates enacted in the current period— 0.0 %5 0.1 %
Effect of cross-border tax laws129 3.5 %46 1.4 %
Tax credits(96)(2.6)%(99)(3.0)%
Changes in valuation allowances— 0.0 %(122)(3.7)%
Nontaxable or nondeductible items7 0.2 %(5)(0.1)%
Changes in unrecognized tax benefits28 0.8 %(28)(0.8)%
Other adjustments(212)(5.8)%(279)(8.4)%
Effective tax rate$238 6.5 %$187 5.6 %
During the first quarter of 2026, the company recorded a deferred tax benefit of $175 million resulting from the recognition of tax attributes related to domestication transactions. During the second quarter of 2026, the company recorded a deferred tax benefit of $148 million in jurisdictions where the deferred tax assets are now expected to be realized due to forecasted income.
During the first quarter of 2025, the company recorded a deferred tax benefit of $125 million resulting from the recognition of a tax attribute related to a domestication transaction. During the second quarter of 2025, the company recorded a deferred tax benefit of $153 million related to capital losses generated as part of intra-entity transactions and a $93 million benefit in jurisdictions where the deferred tax assets are now expected to be realized due to forecasted income.
The company has operations and a taxable presence in approximately 70 countries outside the U.S. The company's effective income tax rate differs from the U.S. federal statutory rate each year due to certain operations that are subject to tax incentives, state and local taxes, and foreign taxes that are different than the U.S. federal statutory rate.
On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was enacted. The OBBBA includes a broad range of provisions, such as the permanent extension of certain otherwise expiring provisions, modifications to the international tax framework and the reinstatement of favorable tax treatment for certain business provisions. The OBBBA made changes to certain US corporate tax provisions which are effective beginning in 2026. The enactment of the OBBBA is not material.
Unrecognized Tax Benefits
As of June 27, 2026, the company had $0.41 billion of unrecognized tax benefits substantially all of which, if recognized, would reduce the effective tax rate. A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:
(In millions)2026
Balance at beginning of year
$419 
Additions due to acquisitions
5 
Additions for tax positions of current year
3 
Additions for tax positions of prior years
21 
Reductions for tax positions of prior years
(1)
Settlements
(43)
Balance at end of period
$405