CSCO · 10-K · 2025A · Full report

Income Tax Rate Changes

CISCO SYSTEMS, INC. · 2025-09-03 · Importance 61 · Surprise 92

The provision for income taxes resulted in an effective tax rate of 8.3% for fiscal 2025 versus 15.6% for fiscal 2024, a net decrease of 7.3 percentage points. Management attributes the majority of the reduction to a $720 million tax benefit related to a U.S. Tax Court opinion issued during the first quarter of fiscal 2025 regarding U.S. taxation of deemed foreign dividends in the transition year of the Tax Cuts and Jobs Act (fiscal 2018) and to an increase in stock‑based compensation windfall. Cisco highlights that its effective tax rate is sensitive to a wide range of international tax rules and potential changes, including OECD Pillar Two developments and other legislative, regulatory or interpretive changes. Cisco directs readers to Note 18 for a full reconciliation and further explanation of its provision for income taxes.

Key facts

• The 7.3 percentage point decrease in effective tax rate in fiscal 2025 was primarily due to a $720 million tax benefit related to a U.S. Tax Court opinion and an increase in stock-based compensation windfall.
• Provision for income taxes — effective tax rate in fiscal 2025: 8.3%, compared with 15.6% in fiscal 2024 and 17.7% in fiscal 2023.

Impact estimates