XML 32 R21.htm IDEA: XBRL DOCUMENT v3.26.1
Income Tax Expense
 9 Months Ended
Apr. 03, 2026
Income Tax Disclosure [Abstract]  
Income Tax Expense Income Tax Expense
H.R. 1, more widely known as the One Big Beautiful Bill Act (“OBBBA”), was signed into law on July 4, 2025. It reversed the requirement for capitalization of U.S. research and development expenditures that came into law under the Tax Cuts and Jobs Act of 2017, but the mandatory requirement of capitalization of foreign research and development expenditures remains. The tax rates for income earned by the Company’s foreign subsidiaries are changed under H.R. 1, which applies to the Company’s fiscal years 2027 and onward. Depending on the Company’s operating results, these changes can materially impact the Company’s effective tax rate and its operating cash flows. During the nine months ended April 3, 2026, the Company recorded a $10 million tax benefit in relation to the OBBBA’s impact on its 2025 tax provision.
On August 16, 2022, the Inflation Reduction Act of 2022 was signed into law, which contained significant changes to laws related to tax, climate, energy, and health care. The tax measures include, among other things, a corporate alternative minimum tax (“CAMT”) of 15% on corporations with three-year average annual adjusted financial statement income (“AFSI”) exceeding $1.0 billion. The Company does not expect to be subject to the CAMT of 15% for fiscal year 2026 as its average annual AFSI did not exceed $1.0 billion for the preceding three-year period.
On December 20, 2021, the Organisation for Economic Co-operation and Development G20 Inclusive Framework on Base Erosion and Profit Shifting released Model Global Anti-Base Erosion rules under Pillar Two (“Pillar Two”). Pillar Two is currently effective in most of the jurisdictions in which we operate. Accordingly, these taxes are included in the Company’s Income tax expense for the three and nine months ended April 3, 2026.
The following table presents the Company’s Income tax expense and effective tax rate:
Three Months EndedNine Months Ended
April 3,
2026		March 28,
2025		April 3,
2026		March 28,
2025
(in millions)
Income (loss) before taxes$4,107 $(1,901)$5,168 $(1,461)
Income tax expense492 32 638 157 
Effective tax rate12 %(2)%12 %(11)%
The relative mix of earnings and losses by jurisdiction, credits and tax holidays in Malaysia that will expire at various dates during years 2028 through 2031 resulted in decreases to the effective tax rate below the U.S. statutory rate for the three and nine months ended April 3, 2026.
The relative mix of earnings and losses by jurisdiction, the goodwill impairment, the deduction for foreign-derived intangible income, credits and tax holidays in Malaysia that will expire at various dates during years 2028 through 2031 resulted in decreases to the effective tax rate below the U.S. statutory rate for the three and nine months ended March 28, 2025.
Uncertain Tax Positions
With the exception of certain unrecognized tax benefits that are directly associated with the tax position taken, unrecognized tax benefits are presented gross in the Condensed Consolidated Balance Sheets.
The following is a tabular reconciliation of the total amounts of unrecognized tax benefits, excluding accrued interest and penalties for the nine months ended April 3, 2026:
(in millions)
Accrual balance at June 27, 2025$140 
Gross increases related to prior year tax positions 29 
Gross increases related to current year tax positions 95 
Gross decrease related to prior year tax positions(11)
Accrual balance at April 3, 2026$253 
As of April 3, 2026 and June 27, 2025, the liability for unrecognized tax benefits (excluding accrued interest and penalties) was $253 million and $140 million, respectively. Interest and penalties related to unrecognized tax benefits are recognized in liabilities recorded for uncertain tax positions and are recorded in the provision for income taxes. Accrued interest and penalties included in the Company’s liability related to unrecognized tax benefits as of April 3, 2026 and June 27, 2025 was $15 million and $11 million, respectively.
The Company believes that adequate provision has been made for any adjustments that may result from any other tax examinations. However, the outcome of such tax examinations cannot be predicted with certainty. If any issues addressed in the Company’s tax examinations are resolved in a manner not consistent with management’s expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs. Any significant change in the amount of the Company’s liability for unrecognized tax benefits would most likely result from additional information relating to the examination of the Company’s tax returns.