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Income Taxes
 12 Months Ended
Jan. 31, 2026
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Earnings before income taxes were $4.8 billion, $5.3 billion, and $5.3 billion during 2025, 2024, and 2023, respectively, including $0.8 billion, $1.1 billion, and $1.2 billion earned by our foreign entities subject to tax outside of the U.S.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), which expands income tax disclosure requirements, primarily related to the effective tax rate reconciliation and income taxes paid. We adopted the standard prospectively in fiscal 2025.

Tax Rate Reconciliation2025
(dollars in millions)
Amount
Percent
U.S. federal statutory rate$1,001 21.0 %
State and local income taxes, net of federal income tax effects (a)
168 3.5 
Foreign tax effects
Hong Kong(72)(1.5)
Other foreign jurisdictions15 0.3 
Effect of cross-border tax laws25 0.5 
Tax credits(77)(1.6)
Nontaxable or nondeductible Items (b)
(16)(0.3)
Changes in unrecognized tax benefits19 0.4 
Other adjustments(1)— 
Effective tax rate$1,062 22.3 %
(a)    State taxes in California, New York, Illinois, and Minnesota contributed to the majority of the tax effect in this category.
(b)    The tax effects of share based compensation are classified within nontaxable or nondeductible items in the effective tax rate reconciliation for 2025.

Tax Rate Reconciliation for years prior to the adoption of ASU 2023-09
20242023
Percent
Percent
U.S. federal statutory rate
21.0 %21.0 %
State and local income taxes, net of federal income tax effects
3.7 3.8 
International(1.1)(1.3)
Excess tax benefit related to share-based payments(0.1)(0.3)
Federal tax credits(0.8)(0.8)
Other(0.5)(0.5)
Effective tax rate22.2 %21.9 %
Provision for Income Taxes
(millions)
202520242023
Current:   
Federal$819 $1,013 $556 
State202 236 208 
International96 101 97 
Total current1,117 1,350 861 
Deferred:   
Federal(72)(184)256 
State11 2 43 
International6 2 (1)
Total deferred(55)(180)298 
Total provision$1,062 $1,170 $1,159 

Income Taxes Paid, Net of Refunds
(millions)
2025
Federal taxes (a)
$781 
State taxes 
California74 
Other197 
International taxes 39 
Total income taxes paid$1,091 
(a)    Includes amounts paid for the purchase of federal transferable tax credits.

We made cash payments of $1,055 million and $374 million for income taxes, net of refunds, during 2024 and 2023, respectively. Due to deferred tax effects and other payment and refund timing differences, income tax payments are not necessarily indicative of our current tax expense or future cash obligations.

Net Deferred Tax Asset / (Liability)
(millions)
January 31, 2026February 1, 2025
Gross deferred tax assets:  
Accrued and deferred compensation$449 $423 
Accruals and reserves not currently deductible252 260 
Self-insured benefits234 207 
Lease liabilities1,534 1,600 
Other144 159 
Total gross deferred tax assets2,613 2,649 
Gross deferred tax liabilities:  
Property and equipment(2,669)(2,830)
Leased assets(1,374)(1,425)
Inventory(591)(484)
Other(231)(203)
Total gross deferred tax liabilities(4,865)(4,942)
Total net deferred tax liability (a)
$(2,252)$(2,293)
(a)$13 million and $10 million of the balances as of January 31, 2026, and February 1, 2025, respectively, is included in Other Noncurrent Assets.
As of January 31, 2026, we had gross tax loss carryforwards of $1.2 billion in Canada and $0.2 billion in Luxembourg. The losses are deemed to have a remote possibility of realization; therefore, a deferred tax asset and valuation allowance are not established.

We file a U.S. federal income tax return and income tax returns in various states and foreign jurisdictions. The U.S. Internal Revenue Service (IRS) is currently auditing certain aspects of our U.S. federal income tax returns for 2021-2024, including transfer pricing matters. The IRS has completed examinations of years 2020 and prior. With few exceptions, we are no longer subject to state and local or non-U.S. income tax examinations by tax authorities for years before 2019.

Reconciliation of Gross Unrecognized Tax Benefits
(millions)
202520242023
Balance at beginning of period$433 $352 $233 
Additions based on tax positions related to the current year36 118 128 
Additions for tax positions of prior years4 22 8 
Reductions for tax positions of prior years(36)(36)(13)
Settlements(1)(23)(4)
Balance at end of period$436 $433 $352 

If we were to prevail on all unrecognized tax benefits recorded, the amount that would benefit the effective tax rate was $226 million, $206 million, and $161 million as of January 31, 2026, February 1, 2025, and February 3, 2024, respectively. In addition, the reversal of accrued interest and penalties would also benefit the effective tax rate. Interest and penalties associated with unrecognized tax benefits are recorded within income tax expense. During 2025, 2024, and 2023, we recorded expense from accrued interest and penalties of $12 million, $13 million, and $6 million, respectively. As of January 31, 2026, February 1, 2025, and February 3, 2024, total accrued interest and penalties were $32 million, $21 million, and $14 million, respectively.