Broadcom Inc.AVGO
Broadcom Inc. Income Taxes Disclosure
Income Taxes
The components of income before income taxes by U.S. and foreign jurisdictions were as follows:
| Fiscal Year | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (In millions) | ||||||||||||||||||||
Domestic income (loss) | $ | 2,507 | $ | (4,851) | $ | (63) | ||||||||||||||
| Foreign income | 20,222 | 14,767 | 15,160 | |||||||||||||||||
Income from continuing operations before income taxes | $ | 22,729 | $ | 9,916 | $ | 15,097 | ||||||||||||||
The components of the provision for (benefit from) income taxes were as follows:
| Fiscal Year | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (In millions) | ||||||||||||||||||||
Current tax provision: | ||||||||||||||||||||
| Federal | $ | 660 | $ | 1,030 | $ | 952 | ||||||||||||||
| State | 185 | 52 | 23 | |||||||||||||||||
| Foreign | 791 | 701 | 541 | |||||||||||||||||
| Total | 1,636 | 1,783 | 1,516 | |||||||||||||||||
Deferred tax provision (benefit): | ||||||||||||||||||||
| Federal | (1,844) | 1,855 | (499) | |||||||||||||||||
| State | (257) | (70) | (31) | |||||||||||||||||
| Foreign | 68 | 180 | 29 | |||||||||||||||||
| Total | (2,033) | 1,965 | (501) | |||||||||||||||||
Total provision for (benefit from) income taxes | $ | (397) | $ | 3,748 | $ | 1,015 | ||||||||||||||
The following is a reconciliation of our effective tax rate to the statutory federal tax rate:
| Fiscal Year | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Statutory tax rate | 21.0 | % | 21.0 | % | 21.0 | % | ||||||||||||||
| State, net of federal benefit | (0.2) | (0.1) | — | |||||||||||||||||
| Foreign income taxed at different rates | (14.9) | (22.4) | (17.3) | |||||||||||||||||
| Deemed inclusion of foreign earnings | 7.1 | 16.3 | 9.9 | |||||||||||||||||
Change in valuation allowance | 5.8 | — | — | |||||||||||||||||
Impact of non-recurring intra-group transfer of certain IP rights | — | 39.6 | — | |||||||||||||||||
Releases and settlements from statutes expirations | (7.9) | — | (2.2) | |||||||||||||||||
Tax contingency interest accrual | 0.3 | 1.8 | 0.3 | |||||||||||||||||
| Excess tax benefits from stock-based compensation | (9.6) | (13.1) | (3.4) | |||||||||||||||||
| Research and development credit | (3.8) | (6.0) | (1.8) | |||||||||||||||||
| Other, net | 0.5 | 0.7 | 0.2 | |||||||||||||||||
| Effective tax rate on income before income taxes | (1.7) | % | 37.8 | % | 6.7 | % | ||||||||||||||
On July 4, 2025, the United States enacted the One Big Beautiful Bill Act, which allows for the immediate expensing of domestic research and development costs and certain capital expenditures, and changes the United States taxation of profits derived from foreign operations. As a result, it is no longer more-likely-than-not that we are able to utilize our federal corporate alternative minimum tax (“CAMT”) credits, and we established a $1,321 million valuation allowance against our CAMT credit carryforwards and CAMT credits generated in the current fiscal year. Our policy is to not consider the impact of future years’ CAMT in our valuation allowance assessment for regular deferred tax assets. Most of the provisions are effective beginning in our fiscal years ending November 1, 2026 or October 31, 2027, with the exception of immediate expensing of qualifying property being effective in fiscal year 2025.
The benefit from income taxes in fiscal year 2025 was primarily due to the recognition of uncertain tax benefits from expiration of statutes of limitations and audit settlements, and excess tax benefits from stock-based awards, partially offset by income from operations and a valuation allowance against our CAMT credits.
The increase in provision for income taxes in fiscal year 2024 compared to fiscal year 2023 was primarily due to the impact of a non-recurring intra-group transfer of certain IP rights to the United States as a result of supply chain realignment and the resulting shift in jurisdictional mix of income, partially offset by an increase in excess tax benefits from stock-based awards.
We derive the effective tax rate benefit attributed to foreign income taxed at different rates primarily from our operations in Singapore and Malaysia. Our tax incentives from the Singapore Economic Development Board provide that any qualifying income earned in Singapore is subject to tax incentives or reduced rates of Singapore income tax, subject to our compliance with the conditions specified in these incentives and legislative developments. These Singapore tax incentives are
scheduled to expire through November 2030. We have also obtained a tax holiday on our qualifying income in Malaysia, which is scheduled to expire in fiscal year 2028. The tax holiday that we negotiated in Malaysia is also subject to our compliance with various operating and other conditions. Before taking into consideration the effects of the U.S. Tax Cuts and Jobs Act and other indirect tax impacts, the effect of these tax incentives and tax holiday was to decrease the provision for income taxes by approximately $2,709 million, $2,261 million and $2,104 million for fiscal years 2025, 2024 and 2023, respectively.
Significant components of our deferred tax assets and liabilities consisted of the following:
| November 2, 2025 | November 3, 2024 | |||||||||||||
| (In millions) | ||||||||||||||
| Deferred income tax assets: | ||||||||||||||
Net operating loss, credits and other carryforwards | $ | 4,261 | $ | 2,905 | ||||||||||
Capitalized research and development | 3,581 | 2,459 | ||||||||||||
| Deferred revenue | 490 | 776 | ||||||||||||
| Employee stock awards | 474 | 291 | ||||||||||||
Depreciation and amortization | 80 | 81 | ||||||||||||
| Other deferred income tax assets | 519 | 672 | ||||||||||||
| Gross deferred income tax assets | 9,405 | 7,184 | ||||||||||||
| Less: valuation allowance | (3,983) | (2,218) | ||||||||||||
| Deferred income tax assets | 5,422 | 4,966 | ||||||||||||
| Deferred income tax liabilities: | ||||||||||||||
| Depreciation and amortization | 7,157 | 8,772 | ||||||||||||
Unamortized debt discount and issuance costs | 359 | 420 | ||||||||||||
| Foreign earnings not indefinitely reinvested | 131 | 105 | ||||||||||||
| Other deferred income tax liabilities | 286 | 210 | ||||||||||||
| Deferred income tax liabilities | 7,933 | 9,507 | ||||||||||||
Net deferred income tax liabilities | $ | (2,511) | $ | (4,541) | ||||||||||
The valuation allowance disclosed in the table above relates to all CAMT credit carryforwards and substantially all U.S. state and foreign net operating loss carryforwards and research and development tax credits that may not be realized.
We continue to indefinitely reinvest $1,606 million of certain accumulated foreign earnings. The unrecognized deferred income tax liability related to these earnings is estimated to be $169 million. All other current and future earnings of all our foreign subsidiaries are not considered permanently reinvested.
As of November 2, 2025, we had tax effected U.S. state net operating loss carryforwards of $182 million and foreign net operating loss carryforwards of $151 million, all of which expire in various years beginning in fiscal year ended November 1, 2026 ("fiscal year 2026"). We had $2,504 million of state research and development tax credits which begin to expire in fiscal year 2026. We had $1,321 million of CAMT credits which do not expire under the current law.
Uncertain Tax Positions
The following table reconciles the beginning and ending balance of gross unrecognized tax benefits:
| Fiscal Year | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (In millions) | ||||||||||||||||||||
| Beginning balance | $ | 5,843 | $ | 4,655 | $ | 5,117 | ||||||||||||||
| Lapses of statutes of limitations | (3,162) | (39) | (634) | |||||||||||||||||
Increases in balances related to tax positions taken during prior periods (including those related to acquisitions made during the year) | 184 | 844 | 26 | |||||||||||||||||
| Decreases in balances related to tax positions taken during prior periods | (10) | (9) | (13) | |||||||||||||||||
Increases in balances related to tax positions taken during current period | 371 | 447 | 170 | |||||||||||||||||
| Decreases in balances related to settlements with taxing authorities | (52) | (55) | (11) | |||||||||||||||||
| Ending balance | $ | 3,174 | $ | 5,843 | $ | 4,655 | ||||||||||||||
We recognize interest and penalties related to unrecognized tax benefits within the provision for (benefit from) income taxes. Accrued interest and penalties were included within other long-term liabilities. In fiscal year 2025, we recognized a benefit of $118 million related to interest and penalties within the benefit from income taxes. During fiscal years 2024 and 2023, we recognized interest and penalties of $144 million and $22 million, respectively, within the provision for income taxes. As of November 2, 2025 and November 3, 2024, the total accrued interest and penalties was approximately $583 million and $701 million, respectively. The decrease in total accrued interest and penalties was primarily the result of the lapses of statutes of limitations.
As of November 2, 2025 and November 3, 2024, approximately $3,757 million and $6,544 million, respectively, of the unrecognized tax benefits and accrued interest and penalties would, if recognized, benefit our effective income tax rate. We are subject to U.S. income tax examination for the fiscal years ended October 30, 2022 and later. Certain of our acquired companies are subject to tax examinations in major jurisdictions outside of the U.S. for the fiscal years ended October 31, 2005 and later. It is possible that our existing unrecognized tax benefits may change up to $841 million as a result of lapses of the statute of limitations for certain audit periods and/or audit examinations expected to be completed within the next 12 months.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Dec 18, 2025 | Showing above |
| 2024 | Dec 20, 2024 | |
| 2023 | Dec 14, 2023 | |
| 2022 | Dec 16, 2022 | |
| 2021 | Dec 17, 2021 | |
| 2020 | Dec 18, 2020 | |
| 2019 | Dec 20, 2019 | |
| 2018 | Dec 21, 2018 | |
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.