v3.25.4
Provision for (Benefit from) Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Provision for (Benefit from) Income Taxes Provision for (Benefit from) Income Taxes
The components of income before income taxes by U.S. and foreign jurisdictions were as follows (in millions):
 Year Ended December 31,
 202520242023
United States$1,302 $1,055 $523 
Foreign959 683 485 
Total$2,261 $1,738 $1,008 
The provision for (benefit from) income taxes consists of the following (in millions):
 Year Ended December 31,
 202520242023
Current provision:
Federal$36 $36 $2 
State43 49 31 
Foreign183 130 101 
262 215 134 
Deferred provision:
Federal169 51 (750)
State25 (5)(135)
Foreign57 52 28 
251 98 (857)
Provision for (benefit from) income taxes$513 $313 $(723)
The effective income tax rate differs from the federal statutory income tax rate applied to the income before income taxes due to the following (in millions):     
 Year Ended December 31,
 202520242023
U.S. federal statutory tax rate$475 21.0 %$365 21.0 %$212 21.0 %
State and local income tax, net of federal benefit (1)
51 2.3 %33 1.9 %(81)(8.1)%
Foreign tax effects
Ireland
Statutory tax rate difference between Ireland and United States
(45)(2.0)%(31)(1.8)%(20)(1.9)%
Other(17)(0.7)%1 — %12 1.2 %
Brazil
Withholding30 1.3 %18 1.0 %— — %
Other— — %2 0.1 %10 0.9 %
Other foreign jurisdictions63 2.8 %58 3.3 %21 2.1 %
Effect of cross-border tax laws
Global intangible low-taxed income(22)(1.0)%(29)(1.6)%45 4.5 %
       Other(1)(0.1)%(6)(0.3)%(1)(0.1)%
Research and development tax credits(53)(2.3)%(64)(3.7)%(74)(7.3)%
Changes in valuation allowances(1)(0.1)%3 0.2 %(930)(92.2)%
Nontaxable or nondeductible items
Stock-based compensation(66)(2.9)%(78)(4.5)%25 2.5 %
Officer’s compensation32 1.4 %28 1.6 %32 3.2 %
Other29 1.3 %13 0.8 %16 1.5 %
Change in unrecognized tax benefits11 0.5 %3 0.2 %9 0.9 %
Acquisition-related effects29 1.3 %(5)(0.3)%3 0.3 %
Other(2)(0.1)%2 0.1 %(2)(0.2)%
Provision for (benefit from) income taxes$513 22.7 %$313 18.0 %$(723)(71.7)%
(1) The states that contribute to the majority (greater than 50%) of the tax effect in this category include Illinois, New Jersey, Virginia, Minnesota, and New York for 2025; Virginia, New York, Illinois, Minnesota, and Georgia for 2024; and Illinois, Virginia, Minnesota, and Pennsylvania for 2023.
Significant components of our deferred tax assets are shown below (in millions). A valuation allowance has been recognized to offset our deferred tax assets, as necessary, by the amount of any tax benefits that, based on evidence, are not expected to be realized.
 December 31,
 20252024
Deferred tax assets:
Net operating loss carryforwards$260 $138 
Credit carryforwards425 458 
Lease liability207 171 
Capitalized research and development323 434 
Depreciation and amortization465 514 
Accrued expenses
98 78 
Other90 90 
Total deferred tax assets1,868 1,883 
Less: valuation allowance(241)(220)
$1,627 $1,663 
Deferred tax liabilities:
Right of use asset(182)(150)
Depreciation and amortization(375)(113)
Other(56)(61)
Net deferred tax assets$1,014 $1,339 
As of December 31, 2025, the Company does not expect to incur material additional income taxes upon the distribution of earnings from its foreign subsidiaries. While the Company intends to repatriate these foreign earnings, there may be local withholding taxes due to various foreign countries and/or U.S. state taxes payable upon distribution of certain lower-tier earnings. The estimated impact of these foreign withholding taxes, after considering available U.S. foreign tax credits, and state taxes is currently immaterial to the Company’s consolidated financial statements.
As of December 31, 2025, we had U.S. federal net operating loss and federal tax credit carryforwards of $578 million and $341 million, respectively, as reported on our tax returns. The federal tax credits will begin to expire in 2041 if not utilized. In addition, as of December 31, 2025, we had state net operating loss and state tax credit carryforwards of approximately $1.0 billion and $354 million, respectively, as reported on our tax returns. The state net operating loss will begin to expire in 2033 if not utilized. State tax credits and a portion of the federal net operating loss carryforwards can be carried forward indefinitely. Utilization of our net operating loss and credit carryforwards may be 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.
As of December 31, 2025, we had Canada net operating loss and tax credit carryforwards of $161 million and $14 million, respectively, as reported on our tax returns. The Canada net operating loss and tax credits will begin to expire in 2039 and 2037, respectively, if not utilized. In addition, as of December 31, 2025, we had United Kingdom net operating loss carryforwards of $162 million, as reported on our tax returns. The United Kingdom net operating loss can be carried forward indefinitely. 
The increase in the 2025 valuation allowance of $21 million was primarily attributable to California tax credit generation.
The increase in the 2024 valuation allowance of $24 million was primarily attributable to California tax credit generation. The decrease in the 2023 valuation allowance of $1.03 billion was primarily attributable to the $1.05 billion release of certain U.S. federal and state valuation allowances offset by approximately a $20 million increase in the California valuation allowance.
The income tax benefit was $723 million for the year ended December 31, 2023. The income tax benefit was primarily attributable to the release of the valuation allowance of certain U.S. federal and state deferred tax assets. We regularly assess the need for a valuation allowance against our deferred tax assets. In making that assessment, we consider both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more likely than not that some or all of the deferred tax assets will not be realized. As of June 30, 2023, we achieved cumulative U.S. income during the prior twelve quarters when considering pre-tax income adjusted for permanent differences and other comprehensive losses. Based on all available positive and negative evidence, having demonstrated sustained profitability which is objective and verifiable, and taking into account anticipated future earnings, we concluded it is more likely than not that our U.S. federal and state deferred tax assets will be realizable, with the exception of California. We released $1.05 billion of our valuation allowance during the year ended December 31, 2023. As of December 31, 2025 and 2024, we maintained a valuation allowance of $241 million and $220 million, respectively, against our California deferred tax assets due to the uncertainty regarding realizability of these deferred tax assets as they have not met the “more likely than not” realization criteria, particularly as we expect research and development tax credit generation to exceed our ability to use the credits in future years. We will continue to monitor the need for a valuation allowance against our deferred tax assets on a quarterly basis.
A reconciliation of the beginning and ending balance of total unrecognized tax benefits is as follows (in millions):
 Year Ended December 31,
 202520242023
Balance at the beginning of the period
$291 $221 $159 
Tax positions taken in prior period:
Gross increases— 2 — 
Gross decreases(3)(2)— 
Tax positions taken in current period:
Gross increases116 73 63 
Settlements— (3)(1)
Balance at the end of the period
$404 $291 $221 
As of December 31, 2025, we had gross unrecognized tax benefits of approximately $404 million, of which $304 million would impact the effective tax rate, if recognized. We recognize accrued interest and penalties related to unrecognized tax benefits as income tax expense. Accrued interest and penalties included in our liability related to unrecognized tax benefits were $17 million and $9 million as of December 31, 2025 and 2024, respectively. The amount of unrecognized tax benefits could be reduced upon expiration of the applicable statutes of limitations. Interest and penalties accrued on these uncertain tax positions are recognized as income tax expense and will be released upon the expiration of the statutes of limitations. These amounts are also not material for any periods presented. Further, $114 million and $68 million of unrecognized tax benefits have been recorded as liabilities as of December 31, 2025 and 2024, respectively.
We are subject to taxation in the United States and foreign jurisdictions. As of December 31, 2025, our tax years 2004 to 2025 remain subject to examination in most jurisdictions.
Due to differing interpretations of tax laws and regulations, tax authorities may dispute our tax filing positions. We periodically evaluate our exposures associated with our tax filing positions and believe that adequate amounts have been reserved for adjustments that may result from tax examinations.
On July 4, 2025, H.R. 1, the "One Big Beautiful Bill Act," was enacted into law, bringing significant amendments to the U.S. tax code. This legislation extends and modifies provisions from the 2017 Tax Cuts and Jobs Act and introduces new tax measures affecting both businesses and individuals. The enacted legislation had an immaterial impact on the Company’s effective tax rate for the year ended December 31, 2025.