NOTE 11 — INCOME TAXES
Provision for Income Taxes
The components of the provision for income taxes were as follows:
(In millions)
(In millions) / (In millions) / (In millions) / (In millions) / (In millions) / (In millions) / (In millions) / (In millions) / (In millions) / (In millions) / (In millions)
Year Ended June 30, ..................... 2025 / 2025 / 2024 / 2024 / 2023 / 2023
Current Taxes
U.S. federal ............................ $ / 14,086 / $ / 12,165 / $ / 14,009
U.S. state and local .................... 3,342 / 2,366 / 2,322
Foreign ................................. 11,423 / 9,858 / 6,678
Current taxes ........................... $ / 28,851 / $ / 24,389 / $ / 23,009
Deferred Taxes
U.S. federal ............................ $ / ( 6,250 / ) / $ / ( 4,791 / ) / $ / ( 6,146 / )
U.S. state and local .................... ( 1,087 / ) / ( 379 / ) / ( 477 / )
Foreign ................................. 281 / 432 / 564
Deferred taxes .......................... $ / ( 7,056 / ) / $ / ( 4,738 / ) / $ / ( 6,059 / )
Provision for income taxes .............. $ / 21,795 / $ / 19,651 / $ / 16,950
U.S. and foreign components of income before income taxes were as follows:
(In millions)
(In millions) / (In millions) / (In millions) / (In millions) / (In millions) / (In millions) / (In millions) / (In millions) / (In millions) / (In millions) / (In millions)
Year Ended June 30, ..................... 2025 / 2025 / 2024 / 2024 / 2023 / 2023
U.S. .................................... $ / 69,212 / $ / 62,886 / $ / 52,917
Foreign ................................. 54,415 / 44,901 / 36,394
Income before income taxes .............. $ / 123,627 / $ / 107,787 / $ / 89,311
Effective Tax Rate
The items accounting for the difference between income taxes computed at the U.S. federal statutory rate and our effective rate were as follows:
Year Ended June 30,
2025 / 2025 / 2024 / 2024 / 2023 / 2023
Federal statutory rate .................. 21.0 % / 21.0 % / 21.0 %
Effect of:
Foreign earnings taxed at lower rates ... ( 1.5 )% / ( 1.4 )% / ( 1.8 )%
Foreign-derived intangible income deduction ... ( 1.0 )% / ( 1.1 )% / ( 1.3 )%
State income taxes, net of federal benefit ... 1.5 % / 1.5 % / 1.6 %
Research and development credit ......... ( 1.1 )% / ( 1.1 )% / ( 1.1 )%
Excess tax benefits relating to stock-based compensation ... ( 0.9 )% / ( 1.1 )% / ( 0.7 )%
Interest, net ........................... 1.0 % / 1.1 % / 0.8 %
Other reconciling items, net ............ ( 1.4 )% / ( 0.7 )% / 0.5 %
Effective rate .......................... 17.6 % / 18.2 % / 19.0 %
The decrease from the federal statutory rate in fiscal years 2025, 2024, and 2023 is primarily due to earnings taxed at lower rates in foreign jurisdictions resulting from producing and distributing our products and services through our foreign regional operations center in Ireland. In fiscal years 2025, 2024, and 2023, our foreign regional operating center in Ireland, which is taxed at a rate lower than the U.S. rate, generated 81 %, 83 %, and 81 % of our foreign income before tax. Other reconciling items, net consists primarily of tax credits and the U.S. global intangible low-taxed income tax, and in fiscal year 2024, includes tax benefits from tax law changes. In fiscal year 2024, tax benefits from tax law changes primarily relate to the delay of the effective date of final foreign tax credit regulations. In fiscal years 2025, 2024, and 2023, there were no individually significant other reconciling items.
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PART II