v3.25.4
Income Taxes
 12 Months Ended
Jan. 31, 2026
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The domestic and foreign components of income before provision for (benefit from) income taxes consisted of the following (in millions):
 Fiscal Year Ended January 31,
 202620252024
Domestic$6,627 $5,119 $4,045 
Foreign2,893 2,319 905 
$9,520 $7,438 $4,950 
The provision for (benefit from) income taxes consisted of the following (in millions):
 Fiscal Year Ended January 31,
 202620252024
Current:
Federal$413 $1,284 $940 
State72 245 199 
Foreign619 925 417 
Total1,104 2,454 1,556 
Deferred:
Federal618 (982)(640)
State121 (167)(182)
Foreign220 (64)80 
Total959 (1,213)(742)
Provision for (benefit from) income taxes$2,063 $1,241 $814 
A reconciliation of income taxes at the statutory federal income tax rate to the provision for (benefit from) income taxes included in the accompanying consolidated statements of operations is as follows (in millions):
 Fiscal Year Ended January 31,
 202620252024
U.S. federal statutory rate$1,999 21.0 %$1,562 21.0 %$1,040 21.0 %
State and local income taxes, net of federal effects (1) 114 1.2 50 0.7 (25)(0.5)
Foreign tax effects:
Ireland
Statutory rate difference between Ireland and U.S.(197)(2.1)(132)(1.8)(82)(1.7)
Other(24)(0.3)4 0.1 6 0.1 
Israel
Effects of reorganization of operations and assets--90 1.2 137 2.8 
Other--19 0.3 (15)(0.3)
Other foreign jurisdictions463 4.9 233 3.1 264 5.3 
Effect of cross-border tax laws:
Global intangible low taxed income, net of foreign tax credit 152 1.6 168 2.3 120 2.4 
Foreign-derived intangible income deduction (2)(188)(2.0)(441)(5.9)(127)(2.6)
Other foreign tax credits (3)(160)(1.7)(46)(0.6)(227)(4.6)
Other28 0.3 (13)(0.2)16 0.3 
Tax Credits
Research and development tax credits(368)(3.9)(295)(4.0)(312)(6.3)
Changes in valuation allowance70 0.7 (7)(0.1)86 1.7 
Nontaxable or Nondeductible items
Effects of reorganization of operations and assets--(94)(1.3)(105)(2.1)
Share-based payment awards4 0.0 (174)(2.3)(26)(0.5)
Other30 0.3 (7)(0.1)3 0.1 
Changes in unrecognized tax benefits151 1.6 337 4.5 67 1.4 
Other adjustments(11)(0.1)(13)(0.2)(6)(0.1)
Provision for (benefit from) income taxes$2,063 21.5 %$1,241 16.7 %$814 16.4 %

(1) The tax effect in this category primarily reflects state and local taxes in California, Virginia, Illinois, New York, New York City, Pennsylvania, Texas, and Minnesota.
(2) Fiscal 2025 foreign-derived intangible income deduction included tax benefits related to an adjustment for fiscal 2023 and 2024.
(3) Fiscal 2024 foreign tax credits included tax benefits attributable to IRS notices.

Income taxes paid, net of refunds, were as follows (in millions):
 Fiscal Year Ended January 31,
 202620252024
Federal$658 $1,091 $417 
State132 276 233 
Foreign
Ireland92 139 -
Israel-287 129 
Other400 268 248 
$1,282 $2,061 $1,027 
Deferred Income Taxes
Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
Significant components of the Company’s deferred tax assets and liabilities were as follows (in millions):
 As of January 31,
 20262025
Deferred tax assets:
Losses and deductions carryforward$200 $209 
Deferred stock-based compensation expense260 237 
Tax credits906 769 
Accrued liabilities494 482 
Intangible assets1,541 1,694 
Lease liabilities685 740 
Unearned revenue124 (28)
Capitalized research & development1,944 2,431 
Other17 65 
Total deferred tax assets6,171 6,599 
Less valuation allowance(967)(786)
Deferred tax assets, net of valuation allowance5,204 5,813 
Deferred tax liabilities:
Capitalized costs to obtain revenue contracts(912)(850)
Purchased intangible assets(1,173)(650)
Depreciation and amortization(193)(164)
Basis difference on strategic and other investments(347)(106)
Lease right-of-use assets(519)(554)
Total deferred tax liabilities(3,144)(2,324)
Net deferred tax assets (liabilities)$2,060 $3,489 
At January 31, 2026, the Company had federal net operating loss carryforwards of approximately $214 million, which expire in fiscal 2027 and through fiscal 2038 with the exception of post-2017 losses that do not expire, and foreign tax credits of approximately $214 million, which expire in fiscal 2029 through fiscal 2036. The Company had California net operating loss carryforwards of approximately $480 million which expire beginning in fiscal 2029 through fiscal 2045, and California research and development tax credits of approximately $1.1 billion, which do not expire. For other states' income tax purposes, the Company had tax credits of approximately $70 million, which expire beginning in fiscal 2027 through fiscal 2036, and insignificant net operating loss carryforwards. Utilization of the Company’s net operating loss carryforwards are subject to annual limitation due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. Such an annual limitation could result in the expiration of the net operating loss and tax credit carryforwards before utilization.
The Company had a valuation allowance of $967 million and $786 million as of January 31, 2026 and January 31, 2025, respectively. The Company regularly assesses the realizability of its deferred tax assets and establishes a valuation allowance if it is more-likely-than-not that some or all of its deferred tax assets will not be realized. The Company evaluates and weighs all available positive and negative evidence such as historic results, future reversals of existing deferred tax liabilities, projected future taxable income, as well as prudent and feasible tax-planning strategies. The assessment requires significant judgment and is performed in each of the applicable jurisdictions. The increase in the valuation allowance during fiscal 2026 was primarily due to state tax credits and certain U.S foreign tax credits that are not expected to be realized. At the end of January 31, 2026, the valuation allowance was primarily related to U.S. states’ net operating loss and tax credits and certain U.S foreign tax credits. The Company will continue to evaluate the need for valuation allowances for its deferred tax assets.
Unrecognized Tax Benefits and Other Considerations
The Company records liabilities related to its uncertain tax positions. Tax positions for the Company and its subsidiaries are subject to income tax audits by multiple tax jurisdictions throughout the world. The Company recognizes the tax benefit of an uncertain tax position only if it is more likely than not that the position is sustainable upon examination by the taxing authority, based on the technical merits. The tax benefit recognized is measured as the largest amount of benefit which is greater than 50 percent likely to be realized upon settlement with the taxing authority.
A reconciliation of the beginning and ending balance of total unrecognized tax benefits for fiscal years 2026, 2025 and 2024 is as follows (in millions):
 Fiscal Year Ended January 31,
 202620252024
Beginning of period$2,419 $2,083 $1,975 
Tax positions taken in prior period:
Gross increases36 53 53 
Gross decreases(52)(65)(85)
Tax positions taken in current period:
Gross increases261 378 287 
Settlements(49)(4)(21)
Lapse of statute of limitations(37)(25)(104)
Currency translation effect61 (1)(22)
End of period$2,639 $2,419 $2,083 
In fiscal 2026, 2025 and 2024, the Company reported a net increase of approximately $220 million, $336 million, and $108 million, respectively, in its unrecognized tax benefits. For fiscal 2026, 2025 and 2024, total unrecognized tax benefits in an amount of $1.9 billion, $1.7 billion and $1.7 billion, respectively, if recognized, would have reduced income tax expense and the Company’s effective tax rate.
The Company has recognized interest and penalties related to unrecognized tax benefits in the income tax provision of $69 million, $89 million and $29 million in fiscal 2026, 2025 and 2024, respectively. Interest and penalties accrued as of January 31, 2026, 2025 and 2024, were $294 million, $225 million and $136 million, respectively.
Certain prior year tax returns are currently being examined by various taxing authorities in major tax jurisdictions including the United States, India, Germany and Israel. The Company currently considers U.S. federal, Japan, Australia, Germany, France, United Kingdom, Ireland, Canada, India and Israel to be major tax jurisdictions. The Company’s U.S. federal tax returns since fiscal 2008 remain open to examination, and non-U.S. tax returns generally remain open to examination since fiscal 2019. The Company believes that it has provided adequate reserves for its income tax uncertainties in all open tax years. As the outcome of the tax audits cannot be predicted with certainty, if any issues addressed in the Company's tax audits are resolved in a manner inconsistent with management's expectations, the Company could adjust its provision for income taxes in the future.