v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income before provision for income taxes was as follows:
 Year Ended December 31,
 202520242023
 (in thousands)
United States$12,198,273 $9,101,391 $5,602,762 
Foreign524,279 864,266 602,643 
Income before income taxes$12,722,552 $9,965,657 $6,205,405 
The components of provision for income taxes for all periods presented were as follows:
 Year Ended December 31,
 202520242023
 (in thousands)
Current tax provision:
Federal$1,317,011 $1,093,667 $854,170 
State311,863 214,814 181,684 
Foreign561,577 536,915 304,539 
Total current2,190,451 1,845,396 1,340,393 
Deferred tax provision:
Federal(155,477)(520,510)(412,760)
State(34,115)(41,700)(55,475)
Foreign(259,508)(29,160)(74,743)
Total deferred(449,100)(591,370)(542,978)
Provision for income taxes$1,741,351 $1,254,026 $797,415 

A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to income before income taxes after the adoption of ASU 2023-09 is as follows:
 Year Ended December 31,
 2025
 (in thousands)Percent
Tax at U.S. Statutory Rate$2,671,734 21.0 %
State and Local Income Taxes(1)
191,271 1.5 %
Foreign Tax Effects
Brazil
Withholding tax on services238,233 1.9 %
Others(77,189)(0.6)%
Other foreign jurisdictions23,290 0.2 %
Effect of Cross-Border Tax Laws
Foreign-derived intangible income(656,828)(5.2)%
Foreign tax credit for withholding taxes(292,148)(2.3)%
Other32,815 0.3 %
Tax Credits
Research and development tax credits(184,709)(1.5)%
Other(9,748)(0.1)%
Changes in Valuation Allowances(8,615)(0.1)%
Nontaxable and Nondeductible items
Share-based payment awards(393,156)(3.1)%
Others80,904 0.6 %
Changes in Unrecognized Tax Benefits130,400 1.0 %
Other Adjustments(4,903)0.1 %
Effective Tax Rate$1,741,351 13.7 %
(1) The states and local jurisdictions that contribute to the majority (greater than 50%) of the tax effect in this category include New York state and city, California, Illinois, New Jersey, and New Mexico.


A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to income before income taxes for years prior to the adoption of ASU 2023-09 is as follows:
 Year Ended December 31,
 20242023
 (in thousands)
Expected tax expense at U.S. federal statutory tax rate$2,092,710 $1,303,123 
State income taxes, net of federal income tax effect166,311 104,717 
Foreign earnings at other than U.S. rates13,909 (32,292)
Research and development tax credit(185,312)(87,036)
Excess tax benefits on stock-based compensation(435,909)(119,043)
Foreign-derived intangible income deduction(502,968)(426,597)
Nontaxable and nondeductible items70,386 41,782 
Other34,899 12,761 
Provision for income taxes$1,254,026 $797,415 
Effective Tax Rate13 %13 %

The components of deferred tax assets and liabilities were as follows:
 
 As of December 31,
 20252024
 (in thousands)
Deferred tax assets:
Stock-based compensation$438,684 $440,889 
Tax credits and net operating loss carryforwards835,529 834,402 
Capitalized research expenses969,243 1,075,474 
Accruals and reserves370,568 152,142 
Operating lease liabilities520,170 522,489 
OCI hedging losses116,492 — 
Unrealized losses41,988 12,157 
Other29,426 18,197 
Total deferred tax assets3,322,100 3,055,750 
Valuation allowance(617,575)(540,272)
Net deferred tax assets2,704,525 2,515,478 
Deferred tax liabilities:
Depreciation & amortization(32,780)(370,709)
Operating right-of-use lease assets(448,313)(449,661)
OCI hedging gains— (220,009)
       Acquired intangibles(261,493)(282,187)
       Other(7,136)(15,354)
Total deferred tax liabilities(749,722)(1,337,920)
Net deferred tax assets$1,954,803 $1,177,558 
The following table shows the deferred tax assets and liabilities within our Consolidated Balance Sheets:
 As of December 31,
 20252024
 (in thousands)
Total deferred tax assets:
Other non-current assets$2,062,078 $1,290,160 
Total deferred tax liabilities:
Other non-current liabilities(107,275)(112,602)
Net deferred tax assets$1,954,803 $1,177,558 
As of December 31, 2025, for tax return purposes, the Company had $823 million of California R&D tax credit carryforwards which can be carried forward indefinitely, $1,018 million of state net operating loss carryforwards, which will begin to expire in 2029, $48 million of U.S. foreign tax credit carryforwards which will begin to expire in 2033, $190 million of foreign net operating loss carryforwards which will begin to expire in 2026 and $51 million of foreign local tax credit carryforwards, which can be carried forward indefinitely.
In evaluating its ability to realize the net deferred tax assets, the Company considered all available positive and negative evidence, including its past operating results and the forecast of future market growth, forecasted earnings, future taxable income, and prudent and feasible tax planning strategies. As of December 31, 2025, the valuation allowance of $618 million was primarily related to California R&D tax credits, state net operating loss carryforwards, and U.S. foreign tax credits that the Company does not expect to realize.
The unrecognized tax benefits that are not expected to result in payment or receipt of cash within one year are classified as “Other non-current liabilities” and a reduction of deferred tax assets, which is classified as “Other non-current assets” in the Consolidated Balance Sheets. As of December 31, 2025 and 2024, the total amount of gross unrecognized tax benefits was $566 million and $432 million, respectively, of which $336 million and $251 million, respectively, if recognized, would favorably impact the Company’s effective tax rate. The aggregate changes in the Company’s total gross amount of unrecognized tax benefits are summarized as follows:
 
As of December 31,
202520242023
(in thousands)
Balance at the beginning of the year$432,280 $327,105 $226,977 
Increases related to tax positions taken during the current period96,108 93,325 65,630 
Increases related to tax positions taken during prior periods50,285 15,751 76,794 
Decreases related to tax positions taken during prior periods(3,195)(3,901)(10,117)
Decreases related to settlements with taxing authorities(9,115)— (32,179)
Decreases related to expiration of statute of limitations— — — 
Balance at the end of the year$566,363 $432,280 $327,105 
The Company includes interest and penalties related to unrecognized tax benefits within the provision for income taxes and in “Other non-current liabilities” in the Consolidated Balance Sheets. During the years ended December 31, 2025, 2024 and 2023, the Company recorded $38 million, $16 million, and $25 million, respectively, of net interest and penalties in the provision for income taxes. The amount of interest and penalties accrued at December 31, 2025 and 2024 was $82 million and $44 million, respectively.
The Company files U.S. federal, state and foreign tax returns. The Company is currently under examination by the IRS for years 2016 through 2022 and is subject to examination for 2023 and 2024. The Company is also generally subject to examination by various state and foreign jurisdictions for years 2018 through 2024. While the Company is in various stages of inquiry and examination with certain taxing authorities and believes that its tax positions will more likely than not be sustained, it is nonetheless possible that future obligations related to these matters could arise. The Company believes that adequate amounts have been reserved for any adjustments that may ultimately result from an examination.
The amounts of cash income taxes paid by the Company were as follows:
Year Ended December 31,
2025
(in thousands)
Federal$1,120,172 
State and local273,976 
Foreign
Brazil275,106 
Korea195,302 
All other foreign355,828 
Income taxes, net of amounts refunded$2,220,384 
The amount of cash income taxes paid by the Company during the years ended December 31, 2024 and 2023 was $1,642 million and $1,155 million, respectively.