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Income Taxes
 12 Months Ended
Sep. 27, 2025
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
Detail of the provision for income taxes from continuing operations consisted of the following for fiscal years 2025, 2024 and 2023 (in millions):
202520242023
Federal$124 $188 $(39)
State54 34 (38)
Foreign84 48 48 
 $262 $270 $(29)
Current$338 $315 $154 
Deferred(76)(45)(183)
 $262 $270 $(29)
The reasons for the difference between the statutory federal income tax rate and our effective income tax rate from continuing operations are as follows for fiscal years 2025, 2024 and 2023:
202520242023
Federal income tax rate21.0 %21.0 %21.0 %
State income taxes4.7 3.4 (0.7)
Unrecognized tax benefits, net1.2 0.7 1.8 
Deferred income tax remeasurement— (0.9)3.8 
General business credits(2.1)(1.9)3.4 
Company-owned life insurance(1.3)(1.7)1.3 
Officer compensation expense1.9 1.1 (0.6)
Foreign rate differences and valuation allowances(1.8)0.3 (1.2)
Goodwill9.4 1.2 (24.2)
Other1.1 1.6 (0.3)
34.1 %24.8 %4.3 %
During fiscal 2025, state tax expense, net of federal impact, was $36 million. Additionally, the effective tax rate was higher than the statutory rate due to the impact of a $343 million non-deductible goodwill impairment. Changes in foreign valuation allowances include $9 million benefit due to legislation enacted in fiscal 2025.
During fiscal 2024, state tax expense, net of federal impact, was $28 million, which included $14 million benefit from operating loss carryforwards and $9 million benefit related to the remeasurement of deferred income taxes, primarily due to legislation decreasing state tax rates enacted in fiscal 2024. Additionally, the effective tax rate is higher than the statutory rate due to the impact of $63 million of non-deductible goodwill associated with the sale of our Vienna, Georgia facility.
During fiscal 2023, state tax benefit, net of federal impact, was $21 million, which included $26 million benefit related to the remeasurement of deferred income taxes, primarily due to legislation decreasing state tax rates enacted in fiscal 2023. Non-deductible goodwill impairments unfavorably impacted the effective tax rate by 24.2%. The tax benefit from income tax credits was $23 million.
Approximately $278 million, $864 million and ($643) million of income (loss) from continuing operations before income taxes for fiscal 2025, 2024 and 2023, respectively, were from our operations based in the United States.
We recognize deferred income taxes for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
The tax effects of major items recorded as deferred tax assets and liabilities as of September 27, 2025 and September 28, 2024, are as follows (in millions):
20252024
AssetsLiabilitiesAssetsLiabilities
Property, plant and equipment$— $1,112 $— $1,128 
Intangible assets— 1,433 — 1,460 
ROU assets— 257 — 206 
Accrued expenses504 — 412 — 
Lease liabilities251 — 191 — 
Net operating loss and credit carryforwards159 — 198 — 
Other210 327 260 332 
$1,124 $3,129 $1,061 $3,126 
Valuation allowance$(173)$(193)
Net deferred tax liability$2,178 $2,258 
At September 27, 2025, our gross state net operating loss carryforwards approximated $1,305 million, of which $1,079 million expire in fiscal years 2026 through 2045, and the remainder has no expiration. Gross foreign net operating loss carryforwards approximated $297 million, of which $63 million expire in fiscal years 2026 through 2042, and the remainder has no expiration. We also have tax credit carryforwards of approximately $37 million which expire in fiscal years 2026 through 2050. We maintain a valuation allowance against the majority of our net operating losses and tax credit carryforwards.
We have accumulated undistributed earnings of foreign subsidiaries aggregating approximately $689 million at September 27, 2025. Our undistributed earnings are generally expected to be indefinitely reinvested outside of the United States, except for excess cash (net of an insignificant amount of applicable withholding taxes) not subject to regulatory requirements. Dividends after December 31, 2017 from foreign subsidiaries are generally not subject to U.S. federal income taxes. Accordingly, no deferred income taxes have been provided on our indefinitely reinvested earnings. Due to the uncertainty of the manner in which the outside basis difference associated with these earnings would reverse, it is not currently practicable to estimate the tax liability that might be payable on the repatriation of these foreign earnings; however, we do not expect any tax due to be material.
The following table summarizes the activity related to our gross unrecognized tax benefits as of September 27, 2025, September 28, 2024 and September 30, 2023 (in millions):
202520242023
Balance as of the beginning of the year$151 $131 $152 
Increases related to current year tax positions19 22 7 
Increases related to prior year tax positions9 12 1 
Reductions related to prior year tax positions(4)(2)(12)
Reductions related to settlements(1)— — 
Reductions related to expirations of statutes of limitations(6)(12)(17)
Balance as of the end of the year$168 $151 $131 
The amount of unrecognized tax benefits, if recognized, that would impact our effective tax rate was $110 million at September 27, 2025 and $104 million at September 28, 2024. We classify interest and penalties on unrecognized tax benefits as income tax expense. At September 27, 2025, and September 28, 2024, before tax benefits, we had $73 million and $59 million, respectively, of accrued interest and penalties on unrecognized tax benefits.
In December 2021, we received an assessment from the Mexican tax authorities related to the 2015 sale of our direct and indirect equity interests in subsidiaries which collectively held our Mexico operation. At September 27, 2025, the assessment totaled approximately $499 million (9.2 billion Mexican pesos), which included tax, inflation adjustment, interest and penalties. Based on analysis of our assessment in accordance with guidance related to unrecognized tax benefits, we have not recorded a liability related to our assessment. Additionally, the purchaser in the transaction also received an assessment from the Mexican tax authorities related to the sale of the indirect equity interest, which was affirmed in January 2025 by a circuit court in Mexico, but remains subject to potential further judicial review under a petition filed by the purchaser. The transaction agreement contains certain mutual indemnification provisions, and both parties have provided notice of indemnification claims to the other party. We believe any final assessment levied against and collected from the purchaser should prohibit potential assessment against us related to the sale of the same indirect equity interest because the Mexican tax authorities cannot collect twice for the same alleged underlying tax liability. We do not reasonably expect that the total amount sought in indemnification could exceed our assessment total at this time. In fiscal 2025, we recorded a pretax liability of $40 million for the estimated probable loss related to the indemnification provisions with the purchaser.
As of September 27, 2025, certain United States federal income tax returns are subject to examination for fiscal years 2021 through 2024. We are currently under examination for fiscal years 2021 and 2022 and are responding to requests from the Internal Revenue Service but have not received any proposed adjustments. We are also subject to income tax examinations by major state and foreign jurisdictions for fiscal years 2014 through 2024 and 2020 through 2024, respectively. We do not expect material changes to our unrecognized tax benefits during the next twelve months.
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted into law. The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, domestic research cost expensing and the business interest expense limitation. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The legislation did not have a material impact on our fiscal 2025 effective tax rate or consolidated financial statements and is not expected to have a material impact in fiscal 2026 but is expected to result in lower cash tax payments in fiscal 2026. We continue to review the OBBBA tax provisions to assess impacts to our consolidated financial statements.