Income Taxes

6 Months Ended

Jul. 02, 2022

Income Tax Disclosure [Abstract]

Income Taxes [Text Block]

Note 5.    Income Taxes

The provision for income taxes in the accompanying statement of income differs from the provision calculated by applying the statutory federal income tax rate to income before provision for income taxes due to the following:

	Six months ended
	July 2,			July 3,
(In millions)	2022			2021
Statutory federal income tax rate	21		%	21		%
Provision for income taxes at statutory rate	$	936		$	1,008
Increases (decreases) resulting from:
Foreign rate differential	(138)			(73)
Income tax credits	(117)			(173)
Global intangible low-taxed income	46			50
Foreign-derived intangible income	(71)			(89)
Excess tax benefits from stock options and restricted stock units	(31)			(47)
Intra-entity transfers	(18)			(162)
Valuation allowances	(175)			29
Withholding taxes	33			28
State income taxes, net of federal tax	67			78
Other, net	(33)			(14)
Provision for income taxes	$	499		$	635

The company has operations and a taxable presence in approximately 70 countries outside the U.S. The company's effective income tax rate differs from the U.S. federal statutory rate each year due to certain operations that are subject to tax incentives, state and local taxes, and foreign taxes that are different than the U.S. federal statutory rate.

Unrecognized Tax Benefits

As of July 2, 2022 the company had $1.10 billion of unrecognized tax benefits substantially all of which, if recognized, would reduce the effective tax rate. A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:

(In millions)	2022
Balance at beginning of year	$	1,124
Additions for tax positions of current year	13
Closure of tax years	(2)
Settlements	(32)
Balance at end of period	$	1,103