v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
In 2023, 2024, and 2025, we recorded a net tax provision of $7.1 billion, $9.3 billion, and $19.1 billion. Our U.S. taxable income is reduced by accelerated depreciation deductions and the resulting U.S. tax liability is reduced by tax credits, primarily related to the U.S. federal research and development credit. Cash paid for income taxes, net of refunds, was $11.2 billion, $12.3 billion, and $8.3 billion for 2023, 2024, and 2025.
The 2025 Tax Act was signed into law on July 4, 2025. The 2025 Tax Act makes changes to the U.S. corporate income tax, including reinstating the option to claim 100% accelerated depreciation deductions on qualified property, with retroactive application beginning January 20, 2025, and immediate expensing of domestic research and development costs, with retroactive application beginning January 1, 2025. For 2025, the 2025 Tax Act increased our income tax provision, primarily due to a decrease in the foreign income deduction, and significantly decreased our cash taxes.
The components of cash paid for income taxes, net of refunds, are as follows (in millions):
 Year Ended December 31,
202320242025
U.S. Federal$7,435 $7,630 $2,751 
U.S. State2,070 2,450 2,125 
International1,674 2,228 3,419 
Total cash taxes paid, net of refunds$11,179 $12,308 $8,295 
Certain foreign subsidiary earnings and losses are subject to current U.S. taxation and the subsequent repatriation of those earnings is not subject to tax in the U.S.
The components of the provision for income taxes, net are as follows (in millions):
 Year Ended December 31,
202320242025
U.S. Federal:
Current$8,652 $9,039 $1,220 
Deferred(5,505)(4,101)11,134 
Total3,147 4,938 12,354 
U.S. State:
Current2,158 2,109 2,067 
Deferred(498)(453)984 
Total1,660 1,656 3,051 
International:
Current2,186 2,765 4,330 
Deferred127 (94)(648)
Total2,313 2,671 3,682 
Provision for income taxes, net$7,120 $9,265 $19,087 
U.S. and international components of income before income taxes are as follows (in millions):
 Year Ended December 31,
 202320242025
U.S.$32,328 $61,947 $89,537 
International5,229 6,667 7,774 
Income before income taxes$37,557 $68,614 $97,311 
The items accounting for differences between income taxes computed at the federal statutory rate and the provision recorded for income taxes are as follows (in millions, except percentages):
 Year Ended December 31,
 202320242025
Income taxes computed at the federal statutory rate$7,887 21.0 %$14,409 21.0 %$20,435 21.0 %
Federal:
Tax credits:
Research and development tax credits(2,196)(5.8)(2,644)(3.9)(2,403)(2.5)
Foreign tax credits(558)(1.5)(440)(0.6)(642)(0.7)
Other credits(185)(0.5)(176)(0.3)(139)(0.1)
Effect of cross-border tax laws:
Foreign income deduction (1)(1,429)(3.8)(2,379)(3.5)(522)(0.5)
Other effects of cross-border tax laws(18)— (33)— (271)(0.3)
Nontaxable and nondeductible items:
Stock-based compensation (2)784 2.1 (2,236)(3.3)(2,029)(2.1)
Other nontaxable and nondeductible items 162 0.4 158 0.3 372 0.4 
Other186 0.5 33 — 486 0.5 
State and local income taxes, net of federal effect (3)1,292 3.4 1,321 1.9 2,455 2.5 
Foreign tax effects1,117 3.0 1,150 1.7 1,517 1.6 
Worldwide changes in prior period unrecognized tax benefits78 0.2 102 0.2 (172)(0.2)
Total$7,120 19.0 %$9,265 13.5 %$19,087 19.6 %
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(1)U.S. companies are eligible for a deduction that lowers the effective tax rate on certain foreign income. This regime is referred to as the Foreign-Derived Intangible Income deduction and is dependent on the amount of our U.S. taxable income.
(2)Includes amounts related to non-taxable and non-deductible stock-based compensation, in addition to excess tax benefits or shortfalls from stock-based compensation. Our tax provision includes $519 million of tax shortfalls from stock-based compensation for 2023, and $2.8 billion and $2.6 billion of excess tax benefits from stock-based compensation for 2024 and 2025.
(3)The jurisdictions that contribute to the majority of the tax effect in this category are Illinois, Maryland, New Jersey, New York, Pennsylvania, and Virginia.
Our provision for income taxes in 2024 was higher than in 2023 primarily due to an increase in pretax income, partially offset by an increase in excess tax benefits from stock-based compensation and an increase in our foreign income deduction.
Our provision for income taxes in 2025 was higher than in 2024 primarily due to an increase in pretax income and a decrease in foreign income deduction resulting from the effects of the 2025 Tax Act.
We intend to invest substantially all of our foreign subsidiary earnings, as well as our capital in our foreign subsidiaries, indefinitely outside of the U.S. in those jurisdictions in which we would incur significant, additional costs upon repatriation of such amounts.
Deferred income tax assets and liabilities are as follows (in millions):
 December 31,
 20242025
Deferred tax assets (1):
Loss carryforwards U.S. - Federal/States$692 $632 
Loss carryforwards - Foreign2,687 2,936 
Accrued liabilities, reserves, and other expenses4,254 5,545 
Stock-based compensation4,089 4,295 
Depreciation and amortization1,133 1,503 
Operating lease liabilities20,921 23,596 
Capitalized research and development22,701 18,725 
Other items1,688 2,166 
Tax credits1,773 2,812 
Total gross deferred tax assets59,938 62,210 
Less valuation allowances (2)(4,893)(5,560)
Deferred tax assets, net of valuation allowances55,045 56,650 
Deferred tax liabilities:
Depreciation and amortization(16,240)(23,159)
Operating lease assets(19,517)(22,177)
Assets held for investment(2,133)(13,149)
Other items(1,190)(1,159)
Net deferred tax assets (liabilities), net of valuation allowances$15,965 $(2,994)
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(1)Deferred tax assets are presented after tax effects and net of tax contingencies.
(2)Relates primarily to deferred tax assets that would only be realizable upon the generation of net income in certain foreign taxing jurisdictions or future capital gains, as well as tax credits.
Our valuation allowances primarily relate to foreign deferred tax assets, including substantially all of our foreign net operating loss carryforwards as of December 31, 2025. Our foreign net operating loss carryforwards for income tax purposes as of December 31, 2025 were approximately $10.6 billion before tax effects and certain of these amounts are subject to annual limitations under applicable tax law. If not utilized, a portion of these losses will begin to expire in 2026.
Income Tax Contingencies
We are subject to income taxes in the U.S. (federal and state) and numerous foreign jurisdictions. Significant judgment is required in evaluating our tax positions and determining our provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. We establish reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. These reserves are established when we believe that certain positions might be challenged despite our belief that our tax return positions are fully supportable. We adjust these reserves in light of changing facts and circumstances, such as the outcome of tax audits. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate.
The reconciliation of our income tax contingencies is as follows (in millions):
 December 31,
 202320242025
Gross tax contingencies – January 1$4,002 $5,228 $6,485 
Gross increases to tax positions in prior periods440 154 310 
Gross decreases to tax positions in prior periods(38)(129)(1,180)
Gross increases to current period tax positions1,009 1,392 1,292 
Settlements with tax authorities(106)(9)(312)
Lapse of statute of limitations(79)(151)(29)
Gross tax contingencies – December 31 (1)$5,228 $6,485 $6,566 
 ___________________
(1)As of December 31, 2025, we had approximately $6.6 billion of income tax contingencies of which $5.0 billion, if fully recognized, would decrease our effective tax rate.
As of December 31, 2024 and 2025, we had accrued interest and penalties, net of federal income tax benefit, related to tax contingencies of $316 million and $400 million. Interest and penalties, net of federal income tax benefit, recognized for the years ended December 31, 2023, 2024, and 2025 were $91 million, $121 million, and $84 million.
We are under examination, or may be subject to examination, by the Internal Revenue Service for the calendar year 2016 and thereafter. These examinations may lead to ordinary course adjustments or proposed adjustments to our taxes or our net operating losses with respect to years under examination as well as subsequent periods.
We are also subject to taxation in various states and foreign jurisdictions including Germany, India, Japan, Luxembourg, and the United Kingdom. We are under, or may be subject to, audit or examination and additional assessments by the relevant authorities in respect of these particular jurisdictions primarily for 2011 and thereafter. We are currently disputing tax assessments in multiple jurisdictions, including with respect to the allocation and characterization of income.
In September 2022, the Luxembourg tax authority (“LTA”) denied the tax basis of certain intangible assets that we distributed from Luxembourg to the U.S. in 2021. When we are assessed by the LTA, we will need to remit taxes related to this matter. We believe the LTA’s position is without merit, we intend to defend ourselves vigorously in this matter, and we expect to recoup taxes paid.
The Indian tax authority (“ITA”) has asserted that tax applies to cloud services fees paid to Amazon in the U.S. We will need to remit taxes related to this matter until it is resolved, which payments could be significant in the aggregate. We believe the ITA’s position is without merit, we are defending our position vigorously, and we expect to recoup taxes paid. If this matter is adversely resolved, we could recognize significant additional tax expense, including for taxes previously paid.
Changes in tax laws, regulations, administrative practices, principles, and interpretations may impact our tax contingencies. Due to various factors, including the inherent complexities and uncertainties of the judicial, administrative, and regulatory processes in certain jurisdictions, the timing of the resolution of income tax controversies is highly uncertain, and the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ from the amounts accrued.