v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income from continuing operations before income taxes consisted of the following (in millions):
Year Ended December 31,
 202320242025
Domestic operations$73,600 $108,076 $143,591 
Foreign operations12,117 11,739 15,235 
Total$85,717 $119,815 $158,826 
Provision for income taxes consisted of the following (in millions):
Year Ended December 31,
 202320242025
Current:
Federal and state$15,716 $21,101 $13,378 
Foreign3,935 3,852 5,028 
Total19,651 24,953 18,406 
Deferred:
Federal and state(7,482)(5,350)8,243 
Foreign(247)94 7 
Total(7,729)(5,256)8,250 
Provision for income taxes$11,922 $19,697 $26,656 
The reconciliation of federal statutory income tax rate to our effective income tax rate was as follows:
Year Ended December 31,
 202320242025
US federal statutory rate18,001 21.0 %25,161 21.0 %33,353 21.0 %
State and local income taxes, net of federal income tax effect(1)
823 1.0 %1,199 1.0 %1,606 1.0 %
Foreign tax effects:
Brazil:
Withholding taxes1,064 1.2 %1,041 0.9 %1,384 0.9 %
Other62 0.1 %12 0.0 %23 0.0 %
Other foreign jurisdictions(74)(0.1)%353 0.3 %396 0.2 %
Effect of change in tax laws or rates enacted in the current period(829)(1.0)%0 0.0 %0 0.0 %
Effect of cross-border tax laws:
Foreign-derived intangible income deduction(3,980)(4.6)%(4,568)(3.8)%(3,931)(2.5)%
Other215 0.2 %321 0.3 %295 0.2 %
Tax credits:
Federal research credit(1,575)(1.8)%(1,792)(1.5)%(2,088)(1.3)%
Foreign tax credits(1,396)(1.6)%(1,373)(1.1)%(1,684)(1.1)%
Other(498)(0.6)%(198)(0.2)%(98)(0.1)%
Changes in valuation allowances513 0.6 %603 0.5 %1,170 0.7 %
Nontaxable or nondeductible items:
Stock-based compensation expense(602)(0.7)%(1,743)(1.5)%(2,601)(1.6)%
Other169 0.2 %203 0.2 %955 0.6 %
Changes in unrecognized tax benefits432 0.5 %689 0.6 %(1,123)(0.7)%
Other adjustments(403)(0.5)%(211)(0.2)%(1,002)(0.6)%
Total$11,922 13.9 %$19,697 16.4 %$26,656 16.8 %
(1)    The tax effect in this category primarily reflects state and local taxes in New York state, New York city, Pennsylvania, Minnesota, Illinois, New Jersey and Wisconsin.
In 2023, the IRS issued a rule change allowing taxpayers to temporarily apply the regulations in effect prior to 2022 related to US federal foreign tax credits as well as a separate rule change with guidance on the capitalization and amortization of research and development expenses. A cumulative one-time adjustment for these tax rule changes was recorded in 2023.
Changes to US tax law enacted on July 4, 2025, allow for immediate expensing of domestic research and experimentation costs, accelerated depreciation on eligible capital expenditures, and other tax law changes impacting 2025 with certain changes effective in 2026. These changes are reflected in our results for the year ended December 31, 2025.
Deferred Income Taxes
Deferred income taxes reflect the net effects 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 our deferred tax assets and liabilities were as follows (in millions):
As of December 31,
20242025
Deferred tax assets:
Accrued employee benefits$1,834 $1,951 
Accruals and reserves not currently deductible2,552 3,570 
Tax credits6,384 7,314 
Net operating losses3,472 4,953 
Operating leases3,336 3,337 
Capitalized research and development
25,903 24,758 
Other1,376 2,143 
Total deferred tax assets44,857 48,026 
Valuation allowance(11,493)(13,942)
Total deferred tax assets net of valuation allowance33,364 34,084 
Deferred tax liabilities:
Property and equipment, net(9,932)(13,256)
Net investment gains(2,978)(8,242)
Operating leases(2,986)(3,103)
Other(1,008)(1,289)
Total deferred tax liabilities(16,904)(25,890)
Net deferred tax assets (liabilities)$16,460 $8,194 
As of December 31, 2025, our federal, state, and foreign net operating loss carryforwards for income tax purposes were approximately $13.0 billion, $25.1 billion, and $2.9 billion respectively. If not utilized, the federal, foreign and state net operating loss carryforwards will all begin to expire in 2026. It is more likely than not that the majority of the net operating loss carryforwards will not be realized. The net operating loss carryforwards are subject to various annual limitations under the tax laws of the different jurisdictions.
As of December 31, 2025, our Federal and California research and development credit carryforwards for income tax purposes were approximately $771 million and $6.4 billion, respectively. If not utilized, the Federal research and development credit will begin to expire in 2037 and the California research and development credit can be carried over indefinitely. We believe the majority of the federal tax credit and state tax credit is not likely to be realized.
As of December 31, 2025, our investment tax credit carryforwards for state income tax purposes were approximately $1.3 billion and will begin to expire in 2033. We use the flow-through method of accounting for investment tax credits. We believe this tax credit is not likely to be realized.
As of December 31, 2025, we maintained a valuation allowance with respect to California deferred tax assets, certain federal net operating losses, certain state net operating losses and tax credits, net deferred tax assets relating to certain Other Bet companies, and certain foreign net operating losses that we believe are not likely to be realized. We continue to reassess the remaining valuation allowance quarterly, and if future evidence allows for a partial or full release of the valuation allowance, a tax benefit will be recorded accordingly.
Cash paid for income taxes, net of refunds, were as follows (in millions):
Year Ended December 31,
202320242025
US federal$13,689 $19,921 $13,658 
US state and local1,224 2,697 2,919 
Foreign:
Brazil
1,264 1,101 1,368 
Other2,987 3,634 3,581 
Total foreign4,251 4,735 4,949 
Total cash paid for income taxes, net of refunds$19,164 $27,353 $21,526 
Uncertain Tax Positions
The following table summarizes the activity related to our gross unrecognized tax benefits (in millions):
Year Ended December 31,
 202320242025
Beginning gross unrecognized tax benefits$7,055 $9,438 $12,619 
Increases related to prior year tax positions740 896 278 
Decreases related to prior year tax positions(682)(83)(1,301)
Decreases related to settlement with tax authorities(21)(311)(2,183)
Increases related to current year tax positions2,346 2,679 2,099 
Ending gross unrecognized tax benefits$9,438 $12,619 $11,512 
We are subject to income taxes in the US and foreign jurisdictions. Significant judgment is required in evaluating our uncertain tax positions and determining our provision for income taxes. The total amount of gross unrecognized tax benefits was $9.4 billion, $12.6 billion, and $11.5 billion as of December 31, 2023, 2024, and 2025, respectively, of which $7.4 billion, $10.0 billion, and $9.7 billion, if recognized, would affect our effective tax rate, respectively.
As of December 31, 2024 and 2025, we accrued $1.1 billion and $1.2 billion in interest and penalties in provision for income taxes, respectively.
We are subject to the continuous examination of our income tax returns by the IRS and other tax authorities. The IRS is currently examining our 2019 through 2021 tax returns. We have also received tax assessments in multiple foreign jurisdictions asserting transfer pricing adjustments or permanent establishment. We continue to defend such claims as presented.
We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. We continue to monitor the progress of ongoing discussions with tax authorities and the effect, if any, of the expected expiration of the statute of limitations in various taxing jurisdictions.
We believe that an adequate provision has been made for any adjustments that may result from tax examinations. However, the outcome of tax audits cannot be predicted with certainty. If any issues addressed in our tax audits are resolved in a manner not consistent with management's expectations, we could be required to adjust our provision for income taxes in the period such resolutions occur.