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Income Taxes
 9 Months Ended
Sep. 30, 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:
Nine months ended
(In millions)September 30, 2023October 1, 2022
Statutory federal income tax rate
21 %21 %
Provision for income taxes at statutory rate
$957 $1,272 
Increases (decreases) resulting from:
Foreign rate differential
(176)(285)
Income tax credits
(217)(118)
Global intangible low-taxed income
66 126 
Foreign-derived intangible income
(104)(102)
Excess tax benefits from stock options and restricted stock units
(60)(63)
Provision for (reversal of) tax reserves, net
9 (543)
Intra-entity transfers
(144)(18)
Foreign exchange loss on inter-company debt refinancing
(112)— 
Provision for (reversal of) valuation allowances, net
(44)240 
Withholding taxes
22 48 
Tax return reassessments and settlements
(63)(94)
State income taxes, net of federal tax
45 133 
Other, net
(28)(66)
Provision for income taxes
$151 $530 
During the third quarter of 2023, the company released a valuation allowance of $183 million in jurisdictions where the deferred tax assets are now expected to be realized. In the first nine months of 2023 the company also recorded a tax benefit of $91 million, net of related tax expenses, from a foreign exchange loss on an intercompany debt refinancing transaction, as well as a $144 million tax benefit resulting from a capital loss generated as part of an intra-entity transaction.
During the third quarter of 2022, the company settled an IRS audit relating to the 2017 and 2018 tax years. The company recorded a $208 million net tax benefit primarily from this settlement and related impacts, which resulted in a decrease in the company’s unrecognized tax benefits of $658 million. The company recorded $49 million of charges for expired tax credits and other related components of the settlement. The company recorded a charge of $395 million to establish a valuation allowance against certain U.S. foreign tax credits which the company believes will more likely than not expire unutilized. The company also recorded $101 million of additional net unrecognized tax benefit liabilities related to other tax audits.
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 September 30, 2023 the company had $0.55 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
(31)
Closure of tax years
(6)
Settlements
(20)
Balance at end of period
$545