XML 60 R20.htm IDEA: XBRL DOCUMENT v3.25.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
Our effective tax rate was 14.3%, 13.8% and 12.1% for 2024, 2023 and 2022. The effective income tax rate for 2024 increased from 2023 due to the 2024 deferred tax benefit on the outside basis difference related to the anticipated sale of the Spinal Implants business partially offset by the 2023 tax effect related to transfers of intellectual property between tax jurisdictions. The effective income tax rate for 2023 increased from 2022 due to the 2022 effective settlement of the United States federal income tax audit for years 2014 through 2018 and the 2022 reversal of deferred income tax on undistributed earnings of foreign subsidiaries partially offset by the 2023 tax effect related to transfers of intellectual property between tax jurisdictions. Additionally, the effective income tax rates for 2024, 2023 and 2022 reflect the continued lower effective income tax rates as a result of our European operations and certain discrete tax items.
Effective Income Tax Rate Reconciliation
202420232022
United States federal statutory rate21.0 %21.0 %21.0 %
United States state and local income taxes, less federal deduction1.1 1.1 2.0 
Foreign income tax at rates other than 21%(4.1)(6.8)(4.1)
Tax related to repatriation of foreign earnings0.3 1.2 (2.4)
United States research and development credits(1.4)(1.2)(1.5)
Intellectual property transfers— (3.3)0.1 
United States federal audit settlement— — (6.1)
Goodwill impairment2.8 — 1.7 
Outside basis difference related to the anticipated sale of the Spinal Implants business(4.9)— — 
Other(0.5)1.8 1.4 
Effective income tax rate14.3 %013.8 %12.1 %
Earnings Before Income Taxes 
202420232022
United States$523 $701 $407 
International2,969 2,972 2,276 
Total$3,492 $3,673 $2,683 
Components of Income Tax Expense (Benefit)
Current income tax expense (benefit):202420232022
United States federal$490 $236 $(76)
United States state and local90 48 64 
International289 430 279 
Total current income tax expense$869 $714 $267 
Deferred income tax expense (benefit):
United States federal$(462)$(212)$(179)
United States state and local(76)(20)(30)
International168 26 267 
Total deferred income tax expense (benefit)$(370)$(206)$58 
Total income tax expense$499 $508 $325 
Interest included in other income (expense), net was expense of $13 and $1 in 2024 and 2023 and income of $71 in 2022. The United States federal deferred income tax expense (benefit) includes the utilization of net operating loss carryforwards of $9, $189 and $56 in 2024, 2023 and 2022.
Deferred Income Tax Assets and Liabilities
Deferred income tax assets:20242023
Inventories$551 $521 
Other accrued expenses207 253 
Depreciation and amortization715 918 
State income taxes167 150 
Share-based compensation100 86 
Research and development capitalization408 295 
International interest expense carryforwards52 46 
Net operating loss and credit carryforwards410 385 
Outside basis difference related to the anticipated sale of the Spinal Implants business170 — 
Other310 235 
Total deferred income tax assets$3,090 $2,889 
Less valuation allowances(228)(223)
Net deferred income tax assets$2,862 $2,666 
Deferred income tax liabilities:
Depreciation and amortization$(1,141)$(1,012)
Undistributed earnings(61)(47)
Total deferred income tax liabilities$(1,202)$(1,059)
Net deferred income tax assets$1,660 $1,607 
Reported as:
Noncurrent deferred income tax assets$1,742 $1,670 
Noncurrent liabilities—Other liabilities(82)(63)
Total$1,660 $1,607 
Accrued interest was $71 and $67 on December 31, 2024 and 2023 which was reported in accrued expenses and other liabilities and other noncurrent liabilities.
United States federal loss carryforwards of $335, with $70 of associated deferred tax asset and with $2 being subject to a valuation allowance, begin to expire in 2025. United States state loss carryforwards of $3,480, with $85 associated deferred tax asset and with $49 being subject to a valuation allowance, begin to expire in 2025. International loss carryforwards of $269, with $69 of associated deferred tax asset and with $63 being subject to a valuation allowance, begin to expire in 2026; however, some have no expiration. We also have tax credit carryforwards of $204 with $83 being subject to a full valuation allowance. The credits with a full valuation allowance begin to expire in 2025.
We recorded deferred income tax on undistributed earnings of foreign subsidiaries not determined to be indefinitely reinvested. In 2022 it was determined that, based on our revised capital plan, certain cash outside the United States would no longer need to be repatriated during the period previously contemplated. As a result deferred taxes of $71 that were recorded on the associated earnings were reversed. The amount of undistributed earnings of foreign subsidiaries determined to be indefinitely reinvested at December 31, 2024 was approximately $10 billion. Determination of the total amount of unrecognized deferred income tax on undistributed earnings of foreign subsidiaries is not practicable.
Uncertain Income Tax Positions
 20242023
Beginning uncertain tax positions$371 $286 
Increases related to current year income tax positions18 102 
Increases related to prior year income tax positions— 10 
Decreases related to prior year income tax positions(4)(33)
Settlements of income tax audits(21)(1)
Statute of limitations expirations and other(3)— 
Foreign currency translation(12)7 
Ending uncertain tax positions$349 $371 
Reported as:
Noncurrent liabilities—Income taxes$349 $371 
Our income tax expense would have been reduced by $224 and $248 in 2024 and 2023 had these uncertain income tax positions been favorably resolved. It is reasonably possible that the amount of unrecognized tax benefits will significantly change due to one or more of the following events in the next 12 months: expiring statutes, audit activity, tax payments, competent authority proceedings related to transfer pricing or final decisions in matters that are the subject of controversy in various taxing jurisdictions in which we operate, including inventory transfer pricing, cost sharing, product royalty and foreign branch arrangements. We are not able to reasonably estimate the amount or the future periods in which changes in unrecognized tax benefits may be resolved. Interest incurred associated with uncertain tax positions is included in other income (expense), net.
In the normal course of business, income tax authorities in various income tax jurisdictions both within the United States and internationally conduct routine audits of our income tax returns filed in prior years. These audits are generally designed to determine if individual income tax authorities are in agreement with our interpretations of complex income tax regulations regarding the allocation of income to the various income tax jurisdictions. Any income tax audit assessment or draft income tax audit assessment received at the conclusion of an audit is reviewed and evaluated for proper financial statement treatment. We have not received any audit assessments or draft assessments that have not been reviewed and evaluated.
Income tax expense in 2022 decreased $162 due to the effective settlement of the United States federal income tax audit for years 2014 through 2018. In addition 2022 other income (expense), net includes a benefit of $50 related to the release of accrued interest
associated with this settlement. Income tax years are open from 2019 through the current year for the United States federal jurisdiction. Income tax years open for our other major jurisdictions range from 2010 through the current year.