Unrecognized deferred income tax liability

  
18.Income Taxes(a)Provision for Income TaxesThe provision for income taxes consists of the following (in millions):

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Years Ended | July 30, 2022 |  | July 31, 2021 |  | July 25, 2020 |
| Federal: |  |  |  |  |  |
| Current | $ | 2,203  |  |  | $ | 1,959  |  |  | $ | 1,101  |  |
| Deferred | (176) |  |  | (203) |  |  | (374) |  |
|  | 2,027  |  |  | 1,756  |  |  | 727  |  |
| State: |  |  |  |  |  |
| Current | 458  |  |  | 513  |  |  | 264  |  |
| Deferred | (156) |  |  | (46) |  |  | 287  |  |
|  | 302  |  |  | 467  |  |  | 551  |  |
| Foreign: |  |  |  |  |  |
| Current | 313  |  |  | 583  |  |  | 1,429  |  |
| Deferred | 23  |  |  | (135) |  |  | 49  |  |
|  | 336  |  |  | 448  |  |  | 1,478  |  |
| Total | $ | 2,665  |  |  | $ | 2,671  |  |  | $ | 2,756  |  |

Income before provision for income taxes consists of the following (in millions):

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Years Ended | July 30, 2022 |  | July 31, 2021 |  | July 25, 2020 |
| United States | $ | 13,550  |  |  | $ | 12,335  |  |  | $ | 7,534  |  |
| International | 927  |  |  | 927  |  |  | 6,436  |  |
| Total | $ | 14,477  |  |  | $ | 13,262  |  |  | $ | 13,970  |  |

The items accounting for the difference between income taxes computed at the federal statutory rate and the provision for income taxes consist of the following:

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Years Ended | July 30, 2022 |  | July 31, 2021 |  | July 25, 2020 |
| Federal statutory rate | 21.0  | % |  | 21.0  | % |  | 21.0  | % |
| Effect of: |  |  |  |  |  |
| State taxes, net of federal tax benefit | 1.7  |  |  | 2.7  |  |  | 3.5  |  |
| Foreign income at other than U.S. rates | 0.8  |  |  | 1.5  |  |  | (1.5) |  |
| Tax credits | (1.6) |  |  | (1.4) |  |  | (0.9) |  |
| Foreign-derived intangible income deduction | (3.9) |  |  | (4.2) |  |  | (2.6) |  |
| Stock-based compensation | 0.3  |  |  | 0.6  |  |  | (0.1) |  |
| Other, net | 0.1  |  |  | (0.1) |  |  | 0.3  |  |
| Total | 18.4  | % |  | 20.1  | % |  | 19.7  | % |

During fiscal 2020, the IRS and Cisco settled all outstanding items related to the audit of our federal income tax returns for the fiscal year ended July 30, 2011 through July 27, 2013. As a result of the settlement, we recognized a net benefit to the provision for income taxes of $102 million, net of a reduction in interest expense of $4 million. Foreign taxes associated with the repatriation of earnings of foreign subsidiaries were not provided on a cumulative total of $6.5 billion of undistributed earnings for certain foreign subsidiaries as of the end of fiscal 2022. We intend to reinvest these earnings indefinitely in such foreign subsidiaries. If these earnings were distributed in the form of dividends or otherwise, or if the shares of the relevant foreign subsidiaries were sold or otherwise transferred, we could be subject to additional income and withholding taxes. The amount of potential unrecognized deferred income tax liability related to these earnings is approximately $681 million.98
