v3.26.3
Income Taxes
 12 Months Ended
Aug. 30, 2026
Income Tax Disclosure [Abstract]  
Income Taxes
Note 8—Taxes
Income Taxes
Income before income taxes is comprised of the following:
202620252024
Domestic$9,070 $8,324 $7,255 
Foreign3,181 2,494 2,485 
Total$12,251 $10,818 $9,740 
The provisions for income taxes are as follows:
202620252024
Federal:
Current$1,206 $1,395 $1,245 
Deferred328 (42)48 
Total federal1,534 1,353 1,293 
State:
Current472 449 431 
Deferred21 (18)(77)
Total state493 431 354 
Foreign:
Current1,041 955 798 
Deferred(43)(20)(72)
Total foreign998 935 726 
Total provision for income taxes$3,025 $2,719 $2,373 
The reconciliation between the statutory tax rate and the effective rate for 2026 is as follows:
2026
Federal taxes at statutory rate$2,573 21.0 %
State and local income taxes, net of federal income tax effect(1)
402 3.3 
Foreign tax effects:
Canada - subnational taxes185 1.5 
Canada - other(12)(0.1)
Other foreign jurisdictions117 1.0 
Effect of cross-border tax laws(46)(0.4)
Tax credits:
Research and development(134)(1.1)
Other tax credits(99)(0.8)
Changes in valuation allowance62 0.5 
Nontaxable or nondeductible items(75)(0.6)
Changes in unrecognized tax benefits50 0.4 
Other adjustments2 — 
Total$3,025 24.7 %
 _______________
(1)State taxes in California, New York, New Jersey, and Oregon make up the majority (greater than 50%) of the tax effect in this category.
The reconciliation between the statutory tax rate and the effective rate for 2025 and 2024 is as follows:
20252024
Federal taxes at statutory rate$2,272 21.0 %$2,045 21.0 %
State taxes, net338 3.1 288 3.0 
Foreign taxes, net222 2.1 109 1.1 
Employee stock ownership plan (ESOP)(28)(0.3)(120)(1.2)
Other(85)(0.8)51 0.5 
Total$2,719 25.1 %$2,373 24.4 %
The Company's effective tax rate in 2026, 2025, and 2024 included tax benefits of $72, $100, and $45, related to stock compensation. In 2024, tax benefits also included $94 related to the portion of the special dividend payable through the Company's 401(k) plan and a net non-recurring tax benefit of $63 related to a transfer pricing settlement and certain true-ups of tax reserves.
The following is a supplemental schedule of cash paid for income taxes, net of refunds:
2026
U.S. federal$1,377 
U.S. state and local:
California209 
Other322 
Foreign:
Canada430 
Mexico185 
Other316 
Total$2,839 
The components of the deferred tax assets (liabilities) are as follows:
20262025
Deferred tax assets:
Equity compensation$122 $100 
Deferred income/membership fees398 369 
Foreign tax credit carry forward470 390 
Operating lease liabilities710 699 
Accrued liabilities and reserves1,041 917 
Total deferred tax assets2,741 2,475 
Valuation allowance(641)(554)
Total net deferred tax assets2,100 1,921 
Deferred tax liabilities:
Property and equipment(1,372)(944)
Merchandise inventories(344)(305)
Operating lease right-of-use assets(675)(670)
Foreign branch deferreds(107)(103)
Other(33)(31)
Total deferred tax liabilities(2,531)(2,053)
Net deferred tax liabilities$(431)$(132)
The deferred tax accounts at the end of 2026 and 2025 include deferred income tax assets of $635 and $592, included in other long-term assets; and deferred income tax liabilities of $1,066 and $724, included in other long-term liabilities.
In 2026 and 2025, the Company had valuation allowances of $641 and $554, primarily related to foreign tax credits that the Company believes will not be realized due to carry forward limitations. The foreign tax credit carry forwards are set to expire beginning in fiscal 2030.
The Company generally no longer considers fiscal year earnings of non-U.S. consolidated subsidiaries (other than China) indefinitely reinvested after 2023, in the case of Taiwan, and after 2017, in the case of all other subsidiaries, and has recorded the estimated incremental foreign withholding taxes (net of available foreign tax credits) and state income taxes payable assuming a hypothetical repatriation to the U.S. The Company considers undistributed earnings of certain non-U.S. consolidated subsidiaries, which totaled $3,230, to be indefinitely reinvested and has not provided for withholding or state taxes.
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits for 2026 and 2025 is as follows:
20262025
Gross unrecognized tax benefit at beginning of year$65 $81 
Gross increases—current year tax positions18 9 
Gross increases—tax positions in prior years25 14 
Gross decreases—tax positions in prior years(6)(38)
Gross decreases—settlements(8)(1)
Gross unrecognized tax benefit at end of year$94 $65 
At the end of 2026 and 2025, there were $94 and $65 of unrecognized tax benefits that if recognized would affect the annual effective tax rate.
Accrued interest and penalties related to income tax matters are classified as a component of income tax expense. Accrued interest and penalties recognized during 2026 and 2025, and accrued at the end of each respective period were immaterial.
The Company files income tax returns in the U.S., various state and local jurisdictions, and in several foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state or local examination for years before fiscal 2018.
Other Taxes
The Company is subject to multiple examinations for value added, sales-based, payroll, product, import, or other non-income taxes in various jurisdictions. In certain cases, the Company has received assessments from the authorities. Possible losses or range of possible losses associated with these matters are either immaterial or an estimate of the possible loss or range of loss cannot be made at this time. If certain matters or a group of matters were to be decided adversely to the Company, it could result in a charge that might be material to the results of an individual fiscal quarter or year.