ADVANCED MICRO DEVICES INCAMD
ADVANCED MICRO DEVICES INC Income Taxes Disclosure
Income Taxes
Continuing Operations
In 2025, the Company adopted ASU 2023-09 with prospective application. ASU 2023-09 updates disclosure requirements for the reconciliation of tax expense from continuing operations, income taxes paid and modifies other income tax-related disclosures.
Income before income taxes consists of the following:
| Year Ended | |||||||||||||||||
| December 27, 2025 | December 28, 2024 | December 30, 2023 | |||||||||||||||
| (In millions) | |||||||||||||||||
| U.S. | $ | 4,588 | $ | 2,369 | $ | 454 | |||||||||||
| Non-U.S. | (422) | (347) | 54 | ||||||||||||||
| Total pre-tax income including equity income in investee | $ | 4,166 | $ | 2,022 | $ | 508 | |||||||||||
The income tax provision (benefit) consists of:
| Year Ended | |||||||||||||||||
| December 27, 2025 | December 28, 2024 | December 30, 2023 | |||||||||||||||
| (In millions) | |||||||||||||||||
| Current: | |||||||||||||||||
| U.S. federal | $ | (493) | $ | 1,338 | $ | 496 | |||||||||||
| U.S. state and local | 32 | 64 | 27 | ||||||||||||||
| Non-U.S. | 106 | 142 | 150 | ||||||||||||||
| Total | (355) | 1,544 | 673 | ||||||||||||||
| Deferred: | |||||||||||||||||
| U.S. federal | 308 | (311) | (860) | ||||||||||||||
| U.S. state and local | (16) | 6 | (29) | ||||||||||||||
| Non-U.S. | (40) | (858) | (130) | ||||||||||||||
| Total | 252 | (1,163) | (1,019) | ||||||||||||||
| Income tax provision (benefit) | $ | (103) | $ | 381 | $ | (346) | |||||||||||
Year Ended | |||||||||||
| December 27, 2025 | |||||||||||
| Amount | Percentage | ||||||||||
| (In millions) | |||||||||||
| Statutory federal income tax expense at 21% | $ | 875 | 21.0 | % | |||||||
| State taxes, net of federal benefit* | 8 | 0.2 | % | ||||||||
Foreign tax effects | |||||||||||
| Canada | |||||||||||
Scientific Research and Experimental Development investment tax credits | (55) | (1.3) | % | ||||||||
Valuation allowance | 51 | 1.2 | % | ||||||||
| Other | 25 | 0.6 | % | ||||||||
| Singapore | |||||||||||
Development and expansion incentive | 70 | 1.7 | % | ||||||||
| Other | 31 | 0.7 | % | ||||||||
Other foreign jurisdictions | 43 | 1.0 | % | ||||||||
Effect of changes in tax laws or rates enacted in the current period | (18) | (0.4) | % | ||||||||
Effect of cross-border tax laws | |||||||||||
| Global Intangible Low-Taxed Income (GILTI) | 157 | 3.8 | % | ||||||||
| Foreign-Derived Intangible Income (FDII) deduction | (195) | (4.7) | % | ||||||||
| Other | (27) | (0.6) | % | ||||||||
Tax credits | |||||||||||
Research credits | (211) | (5.1) | % | ||||||||
Other tax credits | (31) | (0.7) | % | ||||||||
Nontaxable or nondeductible items | |||||||||||
| Stock-based and non-deductible employee compensation | (88) | (2.1) | % | ||||||||
Tax effect from post-acquisition transaction | 47 | 1.1 | % | ||||||||
| Other | 8 | 0.2 | % | ||||||||
Changes in unrecognized tax benefits (including interest and penalties) | (793) | (19.0) | % | ||||||||
| Income tax (benefit) | $ | (103) | (2.5) | % | |||||||
*State tax expense in Illinois and Arizona made up the majority (greater than 50%) of the tax effect in this category
The following table presents required disclosures prior to the adoption of ASU 2023-09 and displays the reconciliation between statutory federal income taxes and the total income tax provision (benefit).
| December 28, 2024 | December 30, 2023 | ||||||||||
(in millions) | |||||||||||
| Statutory federal income tax expense at 21% | $ | 425 | $ | 107 | |||||||
| Tax effect from intercompany integration transaction | 373 | — | |||||||||
| Foreign rate detriment (benefit) | 153 | (11) | |||||||||
| Interest and penalty | 136 | 53 | |||||||||
| State income taxes, net of federal benefit | 22 | (2) | |||||||||
| Foreign-Derived Intangible Income (FDII) deduction | (275) | (185) | |||||||||
| Research credits | (232) | (169) | |||||||||
| GILTI and other foreign inclusion | (133) | (138) | |||||||||
| Stock-based and non-deductible compensation | (101) | (17) | |||||||||
| Other | 13 | 16 | |||||||||
| Income tax provision (benefit) | $ | 381 | $ | (346) | |||||||
The Company recorded an income tax benefit of $103 million and an income tax provision of $381 million in 2025 and 2024, respectively, representing effective tax rates of (2.5%) and 19%, respectively. The decrease in income tax provision in 2025 was primarily driven by an $853 million benefit related to the release of uncertain tax positions pertaining to the reasonable cause relief for dual consolidated losses approved by the IRS in April 2025 whereas the income tax provision in 2024 included $373 million tax effect from an intercompany integration transaction.
In July 2025, the OBBBA was enacted into law. For fiscal year 2025, the primary impact of the OBBBA to the Company’s tax provision was the accelerated expensing of domestic R&D activities which decreased the Company’s income eligible for FDII, reduced the Company’s deferred tax assets, and reduced the Company’s current income tax liability. To the extent OBBBA changes impacted the Company’s effective tax rate reconciliation, the impacts are presented in the respective line items in the effective tax rate reconciliation table above. The OBBBA also resulted in a remeasurement of GILTI deferred tax balances as presented on the line “Effect of changes in tax laws or rates enacted in the current period” in the effective tax rate reconciliation table above. Other OBBBA changes did not have a material impact on the Company’s financial statements.
As part of the Xilinx acquisition and as a result of certain employment and operational commitments the Company has made in Singapore, the Company has been granted a Development and Expansion Incentive (DEI) that is effective through 2031. The DEI reduces the local tax on Singapore income from a statutory rate of 17% to 5% through 2031. The tax expense reflected in the Company’s effective tax rate reconciliation is primarily due to the difference in tax rates applied to the current year pre-tax loss. Due to the current year pre-tax loss in Singapore, the Company did not receive any income tax or earnings per share benefit.
Deferred income taxes reflect the net tax effects of tax carryovers and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the balances for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities as of December 27, 2025 and December 28, 2024 were as follows:
| December 27, 2025 | December 28, 2024 | ||||||||||
| (In millions) | |||||||||||
| Deferred tax assets: | |||||||||||
| Capitalized R&D | $ | 2,556 | $ | 2,892 | |||||||
| Net operating loss carryovers | 61 | 962 | |||||||||
| Accruals and reserves not currently deductible | 727 | 829 | |||||||||
| Federal and state tax credit carryovers | 709 | 679 | |||||||||
| Foreign R&D and investment tax credits | 631 | 579 | |||||||||
| Employee benefits not currently deductible | 402 | 334 | |||||||||
| Lease liability | 231 | 182 | |||||||||
Foreign tax credits | 91 | 77 | |||||||||
| Other | 85 | 111 | |||||||||
| Total deferred tax assets | 5,493 | 6,645 | |||||||||
| Less: valuation allowance | (1,338) | (2,136) | |||||||||
| Total deferred tax assets, net of valuation allowance | 4,155 | 4,509 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Acquired intangibles | (3,227) | (3,614) | |||||||||
| GILTI | (348) | (222) | |||||||||
| Right-of-use assets | (228) | (182) | |||||||||
| Depreciation | (101) | (75) | |||||||||
| Other | (180) | (77) | |||||||||
| Total deferred tax liabilities | (4,084) | (4,170) | |||||||||
| Net deferred tax assets | $ | 71 | $ | 339 | |||||||
The reduction in the Company’s Net operating loss carryovers and the valuation allowance items followed the receipt of the reasonable cause relief for dual consolidated losses approved by the IRS in April 2025. Other reductions in the Company’s net deferred tax assets during 2025 were primarily driven by the impact of OBBBA.
The movement in the deferred tax valuation allowance was as follows:
| December 27, 2025 | December 28, 2024 | December 30, 2023 | |||||||||||||||
| (In millions) | |||||||||||||||||
| Balance at beginning of year | $ | 2,136 | $ | 2,124 | $ | 2,078 | |||||||||||
Charges to income tax expense and other accounts | (798) | 9 | 41 | ||||||||||||||
| Acquisition-related | — | 3 | 5 | ||||||||||||||
| Balance at end of year | $ | 1,338 | $ | 2,136 | $ | 2,124 | |||||||||||
Through the end of fiscal year 2025, the Company continued to maintain a valuation allowance of approximately $1.3 billion for certain state, and foreign tax attributes due to lack of sufficient sources of future taxable income.
The Company’s U.S. federal and state net operating losses (NOLs) carryforwards as of December 27, 2025, were $94 million and $367 million, respectively. $20 million of U.S. federal NOLs will expire between 2027 and 2036, and $74 million of federal NOLs have no expiration date. State NOLs will expire at various dates through 2045. The federal tax credits of $6 million will expire at various dates between 2040 and 2042. The state tax return credits of $848 million will expire at various dates between 2026 and 2040, except for the California R&D credit, which does not expire. The Company also has $678 million of credit carryforward in Canada that will expire between 2028 and 2045.
A reconciliation of the Company's gross unrecognized tax benefits was as follows:
| December 27, 2025 | December 28, 2024 | December 30, 2023 | |||||||||||||||
| (In millions) | |||||||||||||||||
| Balance at beginning of year | $ | 1,498 | $ | 1,463 | $ | 1,361 | |||||||||||
| Increases for tax positions taken in the current year | 50 | 57 | 53 | ||||||||||||||
| Increases for tax positions taken in prior years | 10 | 24 | 57 | ||||||||||||||
| Decreases for tax positions taken in prior years | (4) | (18) | (8) | ||||||||||||||
Decreases for settlements with taxing authorities | (685) | — | — | ||||||||||||||
Decreases for lapses in statutes of limitation | (63) | (28) | — | ||||||||||||||
| Balance at end of year | $ | 806 | $ | 1,498 | $ | 1,463 | |||||||||||
The amount of unrecognized tax benefits that would impact the effective tax rate if recognized was $571 million, $1.3 billion and $1.3 billion as of December 27, 2025, December 28, 2024 and December 30, 2023, respectively. The Company had $190 million, $298 million and $142 million of accrued penalties and interest related to unrecognized tax benefits as of December 27, 2025, December 28, 2024 and December 30, 2023, respectively. As of December 27, 2025 and December 28, 2024, the Company had long-term income tax liabilities related to unrecognized tax benefits, which include interest and penalties, of $806 million and $1.5 billion, respectively, recorded under Other long-term liabilities in the Company’s Consolidated Balance Sheets. The reduction in long-term income tax liabilities was primarily due to the release of $853 million of uncertain tax positions (including interest and penalties) following receipt of reasonable cause relief for dual consolidated losses approved by the IRS in April 2025.
The Company is subject to taxation in the U.S. and foreign jurisdictions. Earnings from non-U.S. activities are subject to local country income tax. The material jurisdiction in which the Company is subject to potential examination by the taxing authority is the United States, where tax years from 2007 are open for audit. Pre-acquisition Xilinx U.S. tax returns for fiscal years 2018 and 2019 are currently under audit by the IRS.
Under current U.S. tax law, the impact of future distributions of earnings from foreign subsidiaries are anticipated to be subject to withholding taxes from local jurisdictions and non-conforming U.S. state jurisdictions. The deferred tax liability on these undistributed earnings is not material.
The table below provides the updated requirements of ASU 2023-09 for cash paid for income taxes, net of refunds.
Year Ended | |||||
| December 27, 2025 | |||||
Cash paid for income taxes, net of refunds: | (In millions) | ||||
| Federal | $ | 578 | |||
| State | 149 | ||||
| Foreign | 157 | ||||
Total cash paid for income taxes, net of refunds | $ | 884 | |||
In 2025, cash paid for income taxes in California was $62 million. The Company has elected a refundable credit for the payments made as a result of the Business Credit Limitation in California.
Discontinued Operations
Net income from discontinued operations for 2025 was $66 million, net of tax expense of $54 million. This includes the results of operations of the ZT Manufacturing Business and the change in fair value of contingent consideration liability of $121 million.Free Sentinel
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 4, 2026 | Showing above |
| 2024 | Feb 5, 2025 | |
| 2022 | Feb 27, 2023 | |
| 2021 | Feb 3, 2022 | |
| 2020 | Jan 29, 2021 | |
| 2019 | Feb 4, 2020 | |
| 2018 | Feb 8, 2019 | |
| 2017 | Feb 27, 2018 | |
| 2016 | Feb 21, 2017 | |
| 2015 | Feb 18, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.