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Income Taxes
 6 Months Ended
Jul. 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:
Six months ended
(In millions)July 1, 2023July 2, 2022
Statutory federal income tax rate
21 %21 %
Provision for income taxes at statutory rate
$587 $936 
Increases (decreases) resulting from:
Foreign rate differential
(125)(138)
Income tax credits
(136)(117)
Global intangible low-taxed income
46 46 
Foreign-derived intangible income
(55)(71)
Excess tax benefits from stock options and restricted stock units
(37)(31)
Provision for (reversal of) tax reserves, net
8 13 
Intra-entity transfers
(144)(18)
Foreign exchange loss on inter-company debt refinancing
(112)— 
Provision for (reversal of) valuation allowances, net
66 (175)
Withholding taxes
12 33 
Tax return reassessments and settlements
(38)(4)
State income taxes, net of federal tax
53 67 
Other, net
(27)(42)
Provision for income taxes
$98 $499 
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 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
(18)
Balance at end of period
$557