v3.26.1
Income Taxes
 12 Months Ended
Jun. 30, 2026
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Provision for Income Taxes
Income before income taxes was derived from the following sources:
For the years ended June 30,202620252024
United States$2,891 $2,514 $2,120 
Foreign1,672 1,593 1,475 
Total$4,563 $4,107 $3,595 
Income tax expense (benefit) consisted of the following:
For the years ended June 30,202620252024
Current:
Federal$415 $424 $328 
State and local76 81 34 
Foreign427 374 356 
Total918 879 718 
Deferred:
Federal26 (98)11 
State and local(11)(52)6 
Foreign(19)(154)15 
Total(4)(304)32 
Total expense (benefit)$914 $575 $750 
Effective Tax Rate
Reconciliation of the statutory federal income tax rate to the effective income tax rate after the adoption of ASU 2023-09 follows:
2026
For the year ended June 30,Amount Percent
Statutory federal income tax$958 21.0 %
State and local income taxes net of federal benefit (1)
51 1.1 
Foreign tax effects48 1.0 
Effect of cross-border tax laws:
Foreign derived intangible income deduction(50)(1.1)
Other(2)0.0 
Tax credits (39)(0.9)
Changes in valuation allowances(1)0.0 
Nontaxable or nondeductible items:
Share-based compensation(72)(1.6)
Other7 0.2 
Worldwide changes in unrecognized tax benefits6 0.1 
Other reconciling items8 0.2 
Total expense (benefit) and effective rate$914 20.0 %
(1) State taxes in California, Connecticut, Illinois, and Minnesota comprised greater than 50% of the tax effect in this category.
Reconciliation of the statutory federal income tax rate to the effective income tax rate prior to the adoption of ASU 2023-09 follows:
For the years ended June 30,20252024
Statutory federal income tax rate21.0 %21.0 %
State and local income taxes0.6 0.9 
Tax related to international activities(2.8)2.3 
Cash surrender value of life insurance(0.1)(0.1)
Foreign derived intangible income deduction(1.3)(1.5)
Research tax credit(0.4)(0.6)
Share-based compensation(1.2)(1.2)
Other(1.8)0.1 
Effective income tax rate14.0 %20.9 %
Deferred Income Taxes
Deferred income taxes are provided for the temporary differences between the financial reporting basis and the tax basis of assets and liabilities. The differences comprising the net deferred taxes shown on the Consolidated Balance Sheets were as follows:
June 30,20262025
Deferred Tax Assets
Capitalized research and development$124 $172 
Inventory78 70 
Long-term contracts48 41 
Loss carryforwards108 114 
Other liabilities and reserves184 189 
Retirement benefits— 27 
Stock-based compensation43 38 
Tax credit carryforwards45 45 
Unrealized currency exchange gains and losses3 5 
Total deferred tax assets633 701 
Valuation allowance(139)(141)
Net deferred tax assets494 560 
Deferred Tax Liabilities
Depreciation and amortization(1,827)(1,748)
Retirement benefits(18)— 
Undistributed foreign earnings(41)(32)
Total deferred tax (liabilities)(1,886)(1,780)
Net deferred tax (liability)$(1,392)$(1,220)
Although future distributions of foreign earnings to the United States should not be subject to U.S. federal income taxes, other U.S. or foreign taxes may be imposed on such earnings. We have analyzed existing factors and determined we will no longer permanently reinvest certain foreign earnings. On these undistributed foreign earnings of approximately $592 million that are no longer permanently reinvested outside of the United States, we have recorded a deferred tax liability of $23 million. The remaining undistributed foreign earnings of approximately $1,170 million remain permanently reinvested outside the United States at June 30, 2026. Of these undistributed earnings, we have recorded a deferred tax liability of $18 million where certain foreign holding companies are not permanently reinvested in their subsidiaries. It is not practicable to estimate the additional taxes, including applicable foreign withholding taxes, which might be payable on the potential distribution of such permanently reinvested foreign earnings.
As of June 30, 2026, we have the following net operating losses, capital losses, tax credits, other loss carryforwards and related valuation allowances:
Tax loss and credit carryforwardsDeferred AssetsValuation AllowanceExpiration
Federal net operating losses$1 $1 2028-2029
Federal credits40 12 2029-2036
State net operating losses2 — 2027-2042
State credits5 — 2027-Unlimited
Foreign net operating losses22 18 2027-Unlimited
Foreign capital and other losses83 83 Unlimited
Total$153 $114 
Included in the table above are valuation allowances of $99 million that relate to non-operating entities whose loss carryforward utilization is considered to be remote. An additional valuation allowance, not included in the table
above, of $25 million, is related to other deferred tax assets and has been established due to the uncertainty of their realization.
The following schedule presents the changes in deferred tax asset valuation allowance as follows:

Beginning
Balance		(Reductions)/Additions
Charged to Income Statement
Other
(Reductions)/
Additions(1)
Ending
Balance
Year ended June 30, 2024
$1,078 $(10)$2 $1,070 
Year ended June 30, 2025
1,070 (929)— 141 
Year ended June 30, 2026
$141 $(2)$— $139 
(1) The balance primarily represents adjustments due to acquisitions.
During the year ended June 30, 2025, we completed an initiative that simplified our foreign legal entity structure. The initiative impacted our evaluation of certain foreign tax loss carryforwards whose realizability was previously considered to be remote. This led to a valuation allowance release and the recording of a $180 million discrete tax benefit. Additionally, as a result of the initiative, $784 million in deferred tax assets for certain other foreign tax loss carryforwards whose realizability was previously considered to be remote, and the associated valuation allowances, were also written off.
Income Taxes Paid
Income taxes paid (net of refunds received) including related interest, penalties, and purchased credits, consisted of the following:
For the year ended June 30,2026
Federal$469 
State and local67 
Foreign:
China86 
Switzerland70 
United Kingdom101 
Other271 
Total foreign528 
Net income tax, related interest, penalties, and purchased credits$1,064 
Uncertain Tax Positions
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
202620252024
Balance at July 1$104 $102 $114 
Additions for tax positions related to current year4 6 6 
Additions for tax positions of prior years18 19 — 
Additions for acquisitions3 — 4 
Reductions for tax positions of prior years(5)— (5)
Reductions for settlements(17)— — 
Reductions for expiration of statute of limitations(5)(27)(15)
Effect of foreign currency translation(3)4 (2)
Balance at June 30$99 $104 $102 
The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $78 million, $104 million and $102 million as of June 30, 2026, 2025 and 2024, respectively. The accrued interest related to the gross unrecognized tax benefits, excluded from the amounts above, was $22 million, $28 million, and $27 million as of June 30, 2026, 2025 and 2024, respectively. The accrued penalties related to the gross unrecognized tax benefits, excluded from the amounts above, was $2 million as of June 30, 2026, 2025, and 2024.
We file income tax returns in the United States and in various foreign jurisdictions. In the normal course of business, we are subject to examination by taxing authorities throughout the world. We are open to assessment of our U.S. federal income tax returns by the Internal Revenue Service for years after 2013, and our state and local income tax returns for years after 2018. We are open to assessment for significant foreign jurisdictions for years after 2014.