v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Our income before provision for (benefit from) income taxes for the years ended December 31, 2025, 2024 and 2023 was as follows (in millions):
Year Ended December 31,
202520242023
Domestic$4,766 $2,292 $3,196 
Noncontrolling interest and redeemable noncontrolling interest61 62 (23)
Foreign451 6,636 6,800 
Income before income taxes$5,278 $8,990 $9,973 
A provision for (benefit from) income taxes of $1.42 billion, $1.84 billion and $(5.00) billion has been recognized for the years ended December 31, 2025, 2024 and 2023, respectively. The components of the provision for (benefit from) income taxes for the years ended December 31, 2025, 2024 and 2023 consisted of the following (in millions):
Year Ended December 31,
202520242023
Current:
Federal$— $— $48 
State5 45 57 
Foreign1,295 1,315 1,243 
Total current1,300 1,360 1,348 
Deferred:
Federal434 831 (5,246)
State21 (49)(653)
Foreign(332)(305)(450)
Total deferred123 477 (6,349)
Total provision for (benefit from) income taxes$1,423 $1,837 $(5,001)
Upon adoption of ASU 2023-09, Improvements to Income Tax Disclosures, as described in Note 2, Summary of Significant Accounting Policies, the reconciliation of taxes at the federal statutory rate to our provision for (benefit from) income taxes for the year ended December 31, 2025 was as follows (in millions, except for percentages):
AmountPercent
U.S. federal statutory tax rate$1,108 21.0 %
Foreign tax effects
China
Statutory tax rate difference between China and United States60 1.1 
Withholding tax361 6.8 
Other(37)(0.7)
Other foreign jurisdictions331 6.3 
Tax credits
Research and development tax credits(352)(6.7)
Foreign tax credits(327)(6.2)
Changes in valuation allowances389 7.5 
Nontaxable or nondeductible items
Nontaxable manufacturing credits(354)(6.7)
Stock-based compensation(172)(3.3)
Other83 1.6 
Changes in unrecognized tax benefits 194 3.7 
Other adjustments139 2.6 
Effective tax rate$1,423 27.0 %
The reconciliation of taxes at the federal statutory rate to our provision for (benefit from) income taxes for the years ended December 31, 2024 and 2023 in accordance with the guidance prior to the adoption of ASU 2023-09 was as follows (in millions):
Year Ended December 31,
20242023
Tax at statutory federal rate$1,887 $2,094 
State tax, net of federal benefit8 (372)
Excess tax benefits related to stock-based compensation(267)(288)
Nontaxable manufacturing credit(291)(101)
Foreign income rate differential(545)(816)
U.S. tax credits(317)(593)
GILTI and Subpart F inclusion882 670 
Unrecognized tax benefits144 183 
Change in valuation allowance163 (5,962)
Other173 184 
Provision for (benefit from) income taxes$1,837 $(5,001)
Upon adoption of ASU 2023-09, Improvements to Income Tax Disclosures, as described in Note 2, Summary of Significant Accounting Policies, cash paid for income taxes, net of refunds, during the year ended December 31, 2025 was as follows (in millions):
Federal$28 
State
California86 
Other states65 
Foreign
China751 
Other countries302 
Total cash paid for income taxes, net of refunds$1,232 
Cash paid for income taxes, net of refunds, during the years ended December 31, 2024 and 2023 was $1.33 billion and $1.12 billion, respectively.
Deferred tax assets (liabilities) as of December 31, 2025 and 2024 consisted of the following (in millions):
December 31,
2025		December 31,
2024
Deferred tax assets:
Net operating loss carry-forwards$1,083 $1,295 
Research and development credits2,030 1,735 
Other tax credits and attributes2,090 1,325 
Deferred revenue999 1,101 
Inventory and warranty reserves2,269 1,769 
Operating lease right-of-use liabilities1,376 1,186 
Capitalized research and development costs2,365 2,448 
Deferred GILTI tax assets709 691 
Other570 412 
Total deferred tax assets13,491 11,962 
Valuation allowance(1,765)(1,224)
Deferred tax assets, net of valuation allowance11,726 10,738 
Deferred tax liabilities:
Depreciation and amortization(3,146)(2,658)
Operating lease right-of-use assets(1,267)(1,097)
Other(514)(561)
Total deferred tax liabilities(4,927)(4,316)
Deferred tax assets (liabilities), net of valuation allowance$6,799 $6,422 
As of December 31, 2025, we maintained valuation allowances of $1.77 billion for deferred tax assets that are not more likely than not to be realized, which primarily included our California deferred tax assets, U.S. foreign tax credits and certain capitalized foreign expenses. The valuation allowance on our net deferred tax assets increased by $541 million and $332 million during the years ended December 31, 2025 and 2024, respectively, and decreased by $6.46 billion during the year ended December 31, 2023. The changes in valuation allowances during the years ended December 31, 2025 and 2024 were primarily due to the changes of our California deferred tax assets, U.S. foreign tax credits and certain capitalized foreign expenses. The change in valuation allowance during the year ended December 31, 2023 was primarily due to the release of our valuation allowance with respect to our U.S. federal and certain state deferred tax assets. In the fourth quarter of 2023, based on the relevant weight of positive and negative evidence, including the amount of our taxable income in recent years which was objective and verifiable, and consideration of our expected future taxable earnings, we concluded that it is more likely than not that most of our U.S. federal and certain state deferred tax assets are realizable and released the valuation allowance on these deferred tax assets. Our deferred tax assets without a valuation allowance are more likely than not to be realized given the expectation of future earnings in the respective jurisdictions.
As of December 31, 2025, we had $3.56 billion of federal and $8.22 billion of state net operating loss carry-forwards available to offset future taxable income, an immaterial amount of which, if not utilized, will begin to expire in 2026. Federal and state laws can impose substantial restrictions on the utilization of net operating loss and tax credit carry-forwards in the event of an “ownership change,” as defined in Section 382 of the Internal Revenue Code. We have determined that no significant limitation would be placed on the utilization of our net operating loss and tax credit carry-forwards due to prior ownership changes or expirations.
As of December 31, 2025, we had federal research and development tax credits of $1.83 billion, federal renewable energy tax credits of $1.38 billion, and state research and development tax credits of $1.21 billion. Most of our state research and development tax credits were in the state of California. If not utilized, some of the federal tax credits may expire in various amounts beginning in 2036. However, California research and development tax credits can be carried forward indefinitely.
As of December 31, 2025, we intend to indefinitely reinvest our foreign earnings and cash unless such repatriation results in no or minimal tax costs. We have recorded the taxes associated with the foreign earnings we intend to repatriate in the future. For the earnings we intend to indefinitely reinvest, no deferred tax liabilities for foreign withholding or other taxes have been recorded. The estimated amount of such unrecognized withholding tax liability associated with the indefinitely reinvested earnings is approximately $371 million.
Uncertain Tax Positions
The changes to our gross unrecognized tax benefits were as follows (in millions):
December 31, 2022$870 
Increases in balances related to prior year tax positions59 
Decreases in balances related to settlement with tax authorities(6)
Increases in balances related to current year tax positions255 
Decreases in balances related to expiration of the statute of limitations(4)
December 31, 20231,174 
Increases in balances related to prior year tax positions51 
Decreases in balances related to prior year tax positions(27)
Increases in balances related to current year tax positions227 
Decreases in balances related to settlement with tax authorities(4)
Decreases in balances related to expiration of the statute of limitations(4)
December 31, 20241,417 
Increases in balances related to prior year tax positions64 
Decreases in balances related to prior year tax positions(24)
Increases in balances related to current year tax positions305 
Decreases in balances related to settlement with tax authorities(3)
Decreases in balances related to expiration of the statute of limitations(13)
December 31, 2025$1,746 
We include interest and penalties related to unrecognized tax benefits in income tax expense. We recognized net interest and penalties related to unrecognized tax benefits in provision for (benefit from) income taxes line of our consolidated statements of operations of $10 million, $23 million and $17 million for the years ended December 31, 2025, 2024 and 2023, respectively. As of December 31, 2025, and 2024, we have accrued $79 million and $69 million, respectively, related to interest and penalties on our unrecognized tax benefits. Unrecognized tax benefits of $1.41 billion, if recognized, would affect our effective tax rate.
We file income tax returns in the U.S. and various state and foreign jurisdictions. We are currently under examination by the Internal Revenue Service (“IRS”) for the years 2015 to 2018. Additional tax years within the periods 2004 to 2014 and 2019 to 2024 remain subject to examination for federal income tax purposes. All net operating losses and tax credits generated to date are subject to adjustment for U.S. federal and state income tax purposes. Our returns for 2004 and subsequent tax years remain subject to examination in U.S. state and foreign jurisdictions.