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INCOME TAXES | 12 Months Ended
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Jan. 28, 2024
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Provision for Income Taxes The following table presents our earnings before the provision for income taxes:
in millions | Fiscal |  | Fiscal |  | Fiscal
2023 |  | 2022 |  | 2021
United States | $ | 18,681 |  |  | $ | 20,990 |  |  | $ | 20,320 |
Foreign | 1,243 |  |  | 1,487 |  |  | 1,417 |
Total | $ | 19,924 |  |  | $ | 22,477 |  |  | $ | 21,737 |
The following table presents our provision for income taxes:
in millions | Fiscal |  | Fiscal |  | Fiscal
2023 |  | 2022 |  | 2021
Current: |  |  |  |  |
Federal | $ | 3,764 |  |  | $ | 3,918 |  |  | $ | 4,066 |
State | 882 |  |  | 880 |  |  | 981 |
Foreign | 365 |  |  | 436 |  |  | 511 |
Total current | 5,011 |  |  | 5,234 |  |  | 5,558 |
Deferred: |  |  |  |  |
Federal | (228) |  |  | 102 |  |  | (155) |
State | 12 |  |  | 61 |  |  | (11) |
Foreign | (14) |  |  | (25) |  |  | (88) |
Total deferred | (230) |  |  | 138 |  |  | (254) |
Provision for income taxes | $ | 4,781 |  |  | $ | 5,372 |  |  | $ | 5,304 |
The following table presents our combined federal, state, and foreign effective tax rates:
| Fiscal |  | Fiscal |  | Fiscal
| 2023 |  | 2022 |  | 2021
Combined federal, state, and foreign effective tax rates | 24.0 | % |  | 23.9 | % |  | 24.4 | %
The following table presents the reconciliation of our provision for income taxes at the federal statutory rate of 21% to the actual tax expense:
in millions | Fiscal |  | Fiscal |  | Fiscal
2023 |  | 2022 |  | 2021
Income taxes at federal statutory rate | $ | 4,184 |  |  | $ | 4,720 |  |  | $ | 4,565 |
State income taxes, net of federal income tax benefit | 706 |  |  | 743 |  |  | 766 |
Other, net | (109) |  |  | (91) |  |  | (27) |
Total | $ | 4,781 |  |  | $ | 5,372 |  |  | $ | 5,304 |
On August 16, 2022, the Inflation Reduction Act of 2022 (“2022 Tax Act”) was enacted into law. The key tax provisions include a 15% minimum tax on adjusted financial statement income. There was no impact on the Company’s effective tax rate as a result of the 15% minimum tax under the 2022 Tax Act. Additionally, as of the end of fiscal 2023, the Organization for Economic Cooperation and Development (“OECD”) has published rules for a new global minimum tax framework through its base erosion and profit shifting pillar two project (“BEPS Pillar Two”), and various governments around the world have enacted or are in the process of enacting legislation on these rules. Many member states have committed to adopting BEPS Pillar Two, which calls for a global minimum tax of 15% to be effective for tax years beginning in 2024. The OECD guidance published to date includes transition and safe harbor rules around the implementation of the BEPS Pillar Two global minimum tax. We are monitoring developments and evaluating the impacts these new rules will have on our effective tax rate, including eligibility to qualify for these safe harbor rules, and at this time do not expect the impact to be material. Deferred Taxes The following table presents the tax effects of temporary differences that give rise to significant portions of our deferred tax assets and deferred tax liabilities:
in millions | January 28, 2024 |  | January 29, 2023
Assets: |  |  |
Deferred compensation | $ | 237 |  |  | $ | 236 |
Accrued self-insurance liabilities | 258 |  |  | 276 |
State income taxes | 209 |  |  | 149 |
Merchandise inventories | 110 |  |  | 30 |
Non-deductible reserves | 474 |  |  | 318 |
Net operating losses | 99 |  |  | 115 |
Lease liabilities | 2,034 |  |  | 1,879 |
Deferred revenue | 191 |  |  | 148 |
Other | 46 |  |  | 56 |
Total deferred tax assets | 3,658 |  |  | 3,207 |
Valuation allowance | (67) |  |  | (5) |
Total deferred tax assets, net of valuation allowance | 3,591 |  |  | 3,202 |
Liabilities: |  |  |
Property and equipment | (988) |  |  | (992) |
Goodwill and other intangibles | (1,000) |  |  | (953) |
Lease right-of-use assets | (1,956) |  |  | (1,799) |
Tax on unremitted earnings | (53) |  |  | (63) |
Other | (144) |  |  | (95) |
Total deferred tax liabilities | (4,141) |  |  | (3,902) |
Net deferred tax liabilities | $ | (550) |  |  | $ | (700) |
The following table presents our noncurrent deferred tax assets and noncurrent deferred tax liabilities, netted by tax jurisdiction, as presented on the consolidated balance sheets:
in millions | Consolidated Balance Sheet Classification |  | January 28, 2024 |  | January 29, 2023
Deferred tax assets | Other assets |  | $ | 313 |  |  | $ | 319 |
Deferred tax liabilities | Deferred income taxes |  | (863) |  |  | (1,019) |
Net deferred tax liabilities |  |  | $ | (550) |  |  | $ | (700) |
As of January 28, 2024, we recorded deferred tax assets of $99 million for net operating losses and $69 million for tax credits, primarily related to state jurisdictions. These losses and credits expire at various dates beginning in 2024 and 2025, respectively. We have concluded that it is more likely than not that tax benefits related to substantially all net operating losses will be realized based upon the expectation that we will generate the necessary taxable income in future periods. We have concluded that it is not more likely than not that tax benefits related to substantially all tax credits will be realized prior to expiration, and a valuation allowance has been recorded against these tax credits. The overall change in our valuation allowance was not material in fiscal 2023. Reinvestment of Unremitted Earnings Substantially all of our current year foreign cash earnings in excess of working capital and cash needed for strategic investments are not intended to be indefinitely reinvested offshore. Therefore, the tax effects of repatriation for applicable state taxes and foreign withholding taxes of such cash earnings have been provided for in the accompanying consolidated statements of earnings. We have the intent and ability to reinvest substantially all of the $4.8 billion of non-cash unremitted earnings of our non-U.S. subsidiaries indefinitely. Accordingly, no provision for state taxes or foreign withholding taxes was recorded on these unremitted earnings in the accompanying consolidated statements of earnings. It is impracticable for us to determine the amount of unrecognized deferred tax liabilities on these indefinitely reinvested earnings due to the complexities associated with the hypothetical calculation. Tax Return Examination Status Our income tax returns are routinely examined by U.S. federal, state and local, and foreign tax authorities. Our U.S. federal tax returns for fiscal years 2010 through 2021, with the exception of 2015, are currently under examination by the IRS. With respect to fiscal years 2010 to 2014, the IRS had issued a proposed adjustment relating to transfer pricing between our entities in the U.S. and China, which was resolved during fiscal year 2023 with no material impact to our consolidated financial condition, results of operations, or cash flows. There are also ongoing U.S. state and local audits and other foreign audits covering fiscal years 2013 through 2021. We do not expect the results from any ongoing income tax audit to have a material impact on our consolidated financial condition, results of operations, or cash flows. Over the next twelve months, it is reasonably possible that the resolution of federal and state tax examinations, as well as the expiration of statutes of limitations, could reduce our unrecognized tax benefits by an immaterial amount. We do not anticipate the resolution of these matters will result in a material change to our consolidated financial condition or results of operations. Unrecognized Tax Benefits The following table reconciles the beginning and ending amount of our gross unrecognized tax benefits:
in millions | Fiscal |  | Fiscal |  | Fiscal
2023 |  | 2022 |  | 2021
Unrecognized tax benefits balance at beginning of fiscal year | $ | 643 |  |  | $ | 570 |  |  | $ | 540 |
Additions based on tax positions related to the current year | 74 |  |  | 75 |  |  | 80 |
Additions for tax positions of prior years | 13 |  |  | 22 |  |  | 24 |
Reductions for tax positions of prior years | (14) |  |  | (7) |  |  | (40) |
Reductions due to settlements | — |  |  | (1) |  |  | (29) |
Reductions due to lapse of statute of limitations | (27) |  |  | (16) |  |  | (5) |
Unrecognized tax benefits balance at end of fiscal year | $ | 689 |  |  | $ | 643 |  |  | $ | 570 |
Unrecognized tax benefits that if recognized would affect our annual effective income tax rate on net earnings were $568 million, $537 million, and $479 million at January 28, 2024, January 29, 2023, and January 30, 2022, respectively. Interest and Penalties Net adjustments to accruals for interest and penalties a ssociated with un certain tax positions were immaterial in fiscal 2023, fiscal 2022, and fiscal 2021. Our total accrued interest and penalties associated with uncertain tax positions were immaterial as of January 28, 2024 and January 29, 2023.

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