v3.25.4
Income Taxes (Tables)
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Schedule of Components of Income Tax Expense
Following is the composition of income tax expense:
202520242023
Current:
Domestic
$4,639 $3,343 $3,042 
Foreign2,159 1,430 613 
Total current tax expense
6,798 4,773 3,655 
Deferred:
Domestic
(1,149)(2,210)(2,375)
Foreign(558)(473)34 
Total deferred tax benefit(1,707)(2,683)(2,341)
Income taxes$5,091 $2,090 $1,314 
Schedule of Cash Payments Relating to Income Taxes and Tax Act Toll Tax
Cash payments of U.S. federal, state, and foreign income taxes, net of refunds, were as follows:
202520242023
Cash payments of income taxes(1)
$10,814 $6,562 $5,559 
(1) 2025 included U.S. federal cash payments of $3.3 billion and cash payments to Ireland of $6.6 billion.
Schedule of Effective Income Tax Rate Reconciliation
Following is a reconciliation of the consolidated income tax expense applying the U.S. federal statutory rate to income before income taxes to the reported consolidated income tax expense for 2025:
2025
Amount(1)
Percent
U.S. federal statutory tax rate$5,404 21.0 %
Foreign tax effects:
Ireland
Statutory tax rate difference between Ireland and the U.S.(346)(1.3)%
Other269 1.0 %
Other foreign jurisdictions(53)(0.2)%
Effect of cross-border tax laws(2)
Foreign-derived intangible income
(334)(1.3)%
Other(149)(0.5)%
Tax credits
(327)(1.3)%
Nontaxable or nondeductible items:
Non-deductible acquired IPR&D(3)
442 1.7 %
Other(121)(0.5)%
Other adjustments(4)
306 1.2 %
Income taxes$5,091 19.8 %
(1) Unrecognized tax benefits related to the current year are presented on a net basis in the category where the tax position is presented.
(2) The effect of cross-border tax laws includes the tax effects of both the cross-border tax and the related foreign tax credit allowed.
(3) Non-deductible acquired IPR&D was primarily related to the acquisitions of Scorpion and SiteOne in 2025. See Note 4 for additional information related to acquisitions.
(4) Other adjustments include individually immaterial amounts for effects of changes in tax laws or rates enacted in the current period, changes in unrecognized tax benefits related to prior years, state and local income tax, and changes in valuation allowances.
Following is a reconciliation of the consolidated income tax expense applying the U.S. federal statutory rate to income before income taxes to the reported consolidated income tax expense for 2024 and 2023:
20242023
Income tax at the U.S. federal statutory tax rate$2,663 $1,377 
Non-deductible acquired IPR&D(1)
566 677 
Foreign-derived intangible income
(307)(237)
International operations, including Puerto Rico(2)
(302)(187)
General business credits(291)(258)
Other(239)(58)
Income taxes$2,090 $1,314 
(1) Non-deductible acquired IPR&D was primarily related to the acquisitions of Morphic in 2024, and DICE, Versanis, and Emergence in 2023. See Note 4 for additional information related to acquisitions.
(2) Includes the impact of GILTI tax and other U.S. taxation of foreign income.
Schedule of Deferred Tax Assets and Liabilities
Significant components of our deferred tax assets and liabilities as of December 31 were as follows:
20252024
Deferred tax assets:
Capitalized research and development$4,518 $4,599 
Sales rebates and discounts2,779 1,776 
Correlative tax adjustments2,392 1,604 
Purchases of intangible assets1,721 1,781 
Tax loss and other tax carryforwards
911 587 
Inventories
711 — 
Tax credit carryforwards649 577 
Compensation and benefits556 565 
Foreign tax redeterminations367 335 
Other1,004 599 
Total gross deferred tax assets15,608 12,423 
Valuation allowances(1,223)(964)
Total deferred tax assets14,385 11,459 
Deferred tax liabilities:
Earnings of foreign subsidiaries(1,291)(773)
Intangibles(1,258)(1,176)
Property and equipment(907)(558)
Prepaid employee benefits(707)(611)
Other
(381)(414)
Total deferred tax liabilities(4,544)(3,532)
Deferred tax assets, net
$9,841 $7,927 
Schedule of Unrecognized Tax Benefits
Following is a reconciliation of the beginning and ending amount of gross unrecognized tax benefits:
202520242023
Beginning balance at January 1$3,976 $3,395 $2,987 
Additions based on tax positions related to the current year1,020 694 364 
Other adjustments(1)
86 (113)44 
Ending balance at December 31$5,082 $3,976 $3,395 
(1) Other adjustments include individually immaterial changes related to prior-year positions, settlements, lapses of statutes of limitation, and foreign currency translation impacts.