MICRON TECHNOLOGY INCMU
MICRON TECHNOLOGY INC Income Taxes Disclosure
Income Taxes
Our income tax (provision) benefit consisted of the following:
| For the year ended | 2025 | 2024 | 2023 | ||||||||
Income (loss) before income taxes and equity in net income (loss) of equity method investees | |||||||||||
| U.S. | $ | 686 | $ | 544 | $ | 235 | |||||
| Foreign | 8,968 | 696 | (5,893) | ||||||||
| $ | 9,654 | $ | 1,240 | $ | (5,658) | ||||||
| Income tax (provision) benefit | |||||||||||
| Current | |||||||||||
| U.S. federal | $ | (275) | $ | (82) | $ | (5) | |||||
| State | (15) | (1) | (1) | ||||||||
| Foreign | (670) | (333) | (178) | ||||||||
| (960) | (416) | (184) | |||||||||
| Deferred | |||||||||||
| U.S. federal | (118) | 18 | (84) | ||||||||
| State | — | — | — | ||||||||
| Foreign | (46) | (53) | 91 | ||||||||
| (164) | (35) | 7 | |||||||||
| Income tax (provision) benefit | $ | (1,124) | $ | (451) | $ | (177) | |||||
The table below reconciles our tax (provision) benefit based on the U.S. federal statutory rate to our effective rate:
| For the year ended | 2025 | 2024 | 2023 | |||||||||||||||||
U.S. federal income tax (provision) benefit at statutory rate | $ | (2,027) | 21.0 | % | $ | (260) | 21.0 | % | $ | 1,188 | 21.0 | % | ||||||||
| U.S. tax on foreign operations | (476) | 4.9 | (7) | 0.6 | 6 | 0.1 | ||||||||||||||
| Change in valuation allowance | 36 | (0.4) | (59) | 4.8 | (50) | (0.9) | ||||||||||||||
| Change in unrecognized tax benefits | (23) | 0.2 | (41) | 3.3 | (30) | (0.5) | ||||||||||||||
| Foreign tax rate differential | 1,132 | (11.7) | (214) | 17.2 | (1,285) | (22.8) | ||||||||||||||
| Research and development tax credits | 208 | (2.2) | 76 | (6.1) | 43 | 0.8 | ||||||||||||||
| State taxes, net of federal benefit | (7) | 0.1 | 12 | (1.0) | 37 | 0.7 | ||||||||||||||
| Other | 33 | (0.3) | 42 | (3.4) | (86) | (1.5) | ||||||||||||||
| Income tax (provision) benefit | $ | (1,124) | 11.6 | % | $ | (451) | 36.4 | % | $ | (177) | (3.1) | % | ||||||||
We operate in a number of jurisdictions outside the United States, including Singapore, where we have tax incentive arrangements. These incentives expire, in whole or in part, at various dates through 2034 and are conditional, in part, upon meeting certain business operations and employment thresholds. The effect of tax incentive arrangements reduced our tax provision by $1.05 billion (benefiting our diluted earnings per share by $0.93) for 2025. As a result of low level of profitability and geographic mix of income, the benefit from tax incentive arrangements was not material for 2024 or 2023.
As of August 28, 2025, certain non-U.S. subsidiaries had cumulative undistributed earnings of $4.31 billion that were deemed to be indefinitely reinvested. A provision has not been recognized to the extent that distributions from such subsidiaries are subject to additional foreign withholding or state income tax. Determination of the amount of unrecognized deferred tax liabilities related to investments in these foreign subsidiaries is not practicable.
Deferred income taxes reflect the net tax effects of temporary differences between the bases of assets and liabilities for financial reporting and income tax purposes as well as carryforwards. Deferred tax assets and liabilities consist of the following:
| As of | August 28, 2025 | August 29, 2024 | ||||||
| Deferred tax assets | ||||||||
| Net operating loss and tax credit carryforwards | $ | 1,016 | $ | 1,050 | ||||
| Accrued salaries, wages, and benefits | 203 | 182 | ||||||
| Operating lease liabilities | 192 | 175 | ||||||
| Inventories | 25 | 4 | ||||||
| Other | 37 | 59 | ||||||
| Gross deferred tax assets | 1,473 | 1,470 | ||||||
| Less valuation allowance | (634) | (593) | ||||||
| Deferred tax assets, net of valuation allowance | 839 | 877 | ||||||
| Deferred tax liabilities | ||||||||
| Right-of-use assets | (163) | (152) | ||||||
Property, plant, and equipment | (6) | (194) | ||||||
| Other | (106) | (70) | ||||||
| Deferred tax liabilities | (275) | (416) | ||||||
| Net deferred tax assets | $ | 564 | $ | 461 | ||||
| Reported as | ||||||||
| Deferred tax assets | $ | 616 | $ | 520 | ||||
| Deferred tax liabilities (included in other noncurrent liabilities) | (52) | (59) | ||||||
| Net deferred tax assets | $ | 564 | $ | 461 | ||||
We assess positive and negative evidence for each jurisdiction to determine whether it is more likely than not that existing deferred tax assets will be realized. As of August 28, 2025, and August 29, 2024, we had a valuation allowance of $634 million and $593 million, respectively, against our net deferred tax assets, primarily related to carryforwards in U.S. states and Malaysia. Changes in 2025 in the valuation allowance were due to adjustments based on management's assessment of the realizability of tax credits, allowances and net operating losses based on a level that is more likely than not to be realized.
As of August 28, 2025, our net operating loss carryforward amounts and expiration periods, as reported to tax authorities, were as follows:
| Year of Expiration | Singapore | Malaysia | State | Japan | Total | ||||||||||||
| 2026 - 2030 | $ | — | $ | — | $ | 29 | $ | — | $ | 29 | |||||||
| 2031 - 2035 | — | — | 139 | 308 | 447 | ||||||||||||
| 2036 - 2040 | — | — | 192 | — | 192 | ||||||||||||
| 2041 - 2045 | — | — | 71 | — | 71 | ||||||||||||
| Indefinite | 2,511 | 1,437 | — | — | 3,948 | ||||||||||||
| $ | 2,511 | $ | 1,437 | $ | 431 | $ | 308 | $ | 4,687 | ||||||||
As of August 28, 2025, our tax credit carryforward amounts and expiration periods, as reported to tax authorities, were as follows:
| Year of Tax Credit Expiration | U.S. Federal | State | Other | Total | ||||||||||
| 2026 - 2030 | $ | — | $ | 72 | $ | — | $ | 72 | ||||||
| 2031 - 2035 | 36 | 145 | — | 181 | ||||||||||
| 2036 - 2040 | — | 141 | 40 | 181 | ||||||||||
| 2041 - 2046 | — | 6 | — | 6 | ||||||||||
| Indefinite | — | 159 | — | 159 | ||||||||||
| $ | 36 | $ | 523 | $ | 40 | $ | 599 | |||||||
Below is a reconciliation of the beginning and ending amount of our unrecognized tax benefits:
| For the year ended | 2025 | 2024 | 2023 | ||||||||
| Beginning unrecognized tax benefits | $ | 716 | $ | 744 | $ | 731 | |||||
| Increases related to tax positions from prior years | 11 | 2 | 2 | ||||||||
Increases related to prior year tax positions taken in current year | — | 20 | 27 | ||||||||
| Increases related to tax positions taken in current year | 55 | 54 | 17 | ||||||||
| Decreases related to tax positions from prior years | (8) | (89) | (33) | ||||||||
Decreases related to settlement with tax authorities | — | (15) | — | ||||||||
Reductions due to lapsed statutes of limitations | (39) | — | — | ||||||||
| Ending unrecognized tax benefits | $ | 735 | $ | 716 | $ | 744 | |||||
As of August 28, 2025, gross unrecognized tax benefits were $735 million, which would have an impact of approximately $611 million on our effective tax rate in the future, if recognized. Amounts accrued for interest and penalties related to uncertain tax positions were not material for any period presented. The resolution of tax audits or expiration of statute of limitations could also reduce our unrecognized tax benefits. Although the timing of final resolution is uncertain, the estimated potential reduction in our unrecognized tax benefits in the next 12 months would not be significant.
We and our subsidiaries file income tax returns with the U.S. federal government, various U.S. states, and various foreign jurisdictions throughout the world. We regularly engage in discussions and negotiations with tax authorities regarding tax matters, including transfer pricing, and we continue to defend any and all such claims presented. Our U.S. federal and state tax returns remain open to examination for 2018 through 2025. We are currently under audit by the Internal Revenue Service for our 2018 and 2019 tax years. In addition, tax returns that remain open to examination in Singapore, Taiwan and Japan range from the years 2017 to 2025. We believe that adequate amounts of taxes and related interest and penalties have been provided, and any adjustments as a result of examinations are not expected to materially adversely affect our business, results of operations, or financial condition.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted, introducing broad changes to the U.S. tax code, including modifications to corporate and international tax provisions, which primarily are effective for us beginning in 2026 and 2027. The aggregate impact of the OBBBA remains uncertain. We will continue to monitor future developments, including regulatory guidance and interpretations, which could have a material impact.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Oct 3, 2025 | Showing above |
| 2024 | Oct 4, 2024 | |
| 2023 | Oct 6, 2023 | |
| 2022 | Oct 7, 2022 | |
| 2021 | Oct 8, 2021 | |
| 2020 | Oct 19, 2020 | |
| 2019 | Oct 17, 2019 | |
| 2018 | Oct 15, 2018 | |
| 2017 | Oct 26, 2017 | |
| 2016 | Oct 28, 2016 | |
| 2015 | Oct 27, 2015 | |
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.