v3.25.3

Income Taxes | 9 Months Ended
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Sep. 28, 2025
Income Tax Disclosure [Abstract] |
Income Taxes | Income Tax Each year NXP makes an estimate of its annual effective tax rate. This estimated annual effective tax rate ("EAETR") is then applied to the year-to-date Income (loss) before income taxes excluding discrete items, to determine the year-to-date benefit (provision) for income taxes. The income tax effects of any discrete items are recognized in the interim period in which they occur. As the year progresses, the Company continually refines the EAETR based upon actual events and the apportionment of our earnings (loss). This continual estimation process periodically may result in a change to our EAETR for the year. When this occurs, we adjust on an accumulated basis the benefit (provision) for income taxes during the quarter in which the change occurs. Our provision for income taxes for 2025 is based on our EAETR of 18.7%, which is lower than the Netherlands statutory tax rate of 25.8%, primarily due to tax benefits from the Netherlands and foreign tax incentives.
| For the three months ended |  | For the nine months ended
| September 28, 2025 |  | September 29, 2024 |  | September 28, 2025 |  | September 29, 2024
Tax benefit (provision) calculated at EAETR | (149) |  |  | (160) |  |  | (380) |  |  | (446) |
Discrete tax benefit (provision) items | 1 |  |  | (13) |  |  | (14) |  |  | (22) |
Benefit (provision) for income taxes | (148) |  |  | (173) |  |  | (394) |  |  | (468) |
Effective tax rate | 18.6 | % |  | 19.0 | % |  | 19.4 | % |  | 18.6 | %
The effective tax rate of 18.6% for the third quarter of 2025 was lower than the EAETR due to the income tax benefit for discrete items of $1 million. The discrete items are primarily related to the impact of foreign currency on income tax related items, changes in estimates for previous years, and changes in the litigation accrual and related insurance reimbursements relating to the Motorola Personal Injury Lawsuits regarding previous years. For the first nine months ended 2025, the effective tax rate of 19.4% was higher than 18.7% due to a net result of unfavorable discrete items of $14 million. These discrete items are primarily related to the impact of changes in estimates for previous years, and changes in the litigation accrual and related insurance reimbursements relating to the Motorola Personal Injury Lawsuits. The effective tax rate of 19.4% for the first nine months of 2025 was higher compared to the rate for the first nine months ended 2024 of 18.6% due to a different mix of the benefit (provision) for income taxes in our operating locations and lower foreign tax incentives in the current period as a result of a decrease in qualifying income. On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented as of 2026. We have assessed that there is effectively no material tax impact on our consolidated financial statements. We also note that there is still unclarity about what the G7 statement in relation to the US on global minimum taxes, as announced on June 28, 2025, could mean for the Company.

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