The decrease in our effective tax rate for fiscal year 2025 compared to fiscal year 2024 was due to changes in the mix of our earnings and tax expenses between the U.S. and foreign countries. The decrease in our effective tax rate for fiscal year 2024 compared to fiscal year 2023 was primarily due to tax benefits from tax law changes, including the delay of the effective date of final foreign tax credit regulations.
The components of the deferred income tax assets and liabilities were as follows:
(In millions)
June 30, ................................ 2025 / 2025 / 2024 / 2024
Deferred Income Tax Assets
Stock-based compensation expense ........ $ / 909 / $ / 765
Accruals, reserves, and other expenses ... 5,050 / 4,381
Loss and credit carryforwards ........... 2,114 / 1,741
Amortization ............................ 4,118 / 4,159
Leasing liabilities ..................... 12,874 / 6,504
Unearned revenue ........................ 4,324 / 3,717
Book/tax basis differences in investments and debt ... 303 / 9
Capitalized research and development .... 16,891 / 11,442
Other ................................... 529 / 426
Deferred income tax assets .............. 47,112 / 33,144
Less valuation allowance ................ ( 1,169 / ) / ( 1,045 / )
Deferred income tax assets, net of valuation allowance ... $ / 45,943 / $ / 32,099
Deferred Income Tax Liabilities
Leasing assets .......................... $ / ( 12,696 / ) / $ / ( 6,503 / )
Depreciation ............................ ( 5,699 / ) / ( 3,940 / )
Deferred tax on foreign earnings ........ ( 1,148 / ) / ( 1,837 / )
Other ................................... ( 127 / ) / ( 167 / )
Deferred income tax liabilities ......... $ / ( 19,670 / ) / $ / ( 12,447 / )
Net deferred income tax assets .......... $ / 26,273 / $ / 19,652
Reported As
Other long-term assets .................. $ / 29,108 / $ / 22,270
Long-term deferred income tax liabilities ... ( 2,835 / ) / ( 2,618 / )
Net deferred income tax assets .......... $ / 26,273 / $ / 19,652
Deferred income tax balances reflect the effects of temporary differences between the carrying amounts of assets and liabilities and their tax bases and are stated at enacted tax rates expected to be in effect when the taxes are paid or recovered.
As of June 30, 2025, we had federal, state, and foreign net operating loss carryforwards of $ 390 million, $ 836 million, and $ 2.6 billion, respectively. The federal and state net operating loss carryforwards have varying expiration dates ranging from fiscal year 2026 to 2045 or indefinite carryforward periods , if not utilized. The majority of our foreign net operating loss carryforwards do not expire. Certain acquired net operating loss carryforwards are subject to an annual limitation but are expected to be realized with the exception of those which have a valuation allowance. As of June 30, 2025, we had $ 816 million federal capital loss carryforwards for U.S. tax purposes. The federal capital loss carryforwards will expire in fiscal year 2030 if not utilized.
The valuation allowance disclosed in the table above relates to the foreign net operating loss carryforwards, federal capital loss carryforwards, and other net deferred tax assets that may not be realized.
Income taxes paid, net of refunds, were $ 28.7 billion, $ 23.4 billion, and $ 23.1 billion in fiscal years 2025, 2024, and 2023, respectively.
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PART II