Income Taxes

3 Months Ended

Apr. 01, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The provision for income taxes in the accompanying statements 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:

	Three months ended
(In millions)	April 1, 2023			April 2, 2022
Statutory federal income tax rate	21		%	21		%
Provision for income taxes at statutory rate	$	286		$	533
Increases (decreases) resulting from:
Foreign rate differential	(52)			(82)
Income tax credits	(83)			(64)
Global intangible low-taxed income	12			26
Foreign-derived intangible income	(23)			(37)
Excess tax benefits from stock options and restricted stock units	(27)			(18)
Provision for (reversal of) tax reserves, net	9			—
Intra-entity transfers	(144)			—
Valuation allowances	67			(87)
Withholding taxes	5			12
Tax return reassessments and settlements	(3)			(5)
State income taxes, net of federal tax	24			31
Other, net	(25)			(8)
Provision for income taxes	$	46		$	301

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 April 1, 2023 the company had $0.56 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)	2023
Balance at beginning of year	$	572
Additions for tax positions of current year	4
Additions for tax positions of prior years	26
Reductions for tax positions of prior years	(27)
Settlements	(15)
Balance at end of period	$	560