CSCO · 10-K · 2026A · Full report
Income Tax Rate Changes
CISCO SYSTEMS, INC. · 2026-09-02 · Importance 53 · Surprise 82 · Matches filing data
Cisco's effective tax rate increased to 17.1% in fiscal 2026 from 8.3% in fiscal 2025. The increase primarily reflected the absence of a $720 million fiscal 2025 tax benefit related to a U.S. Tax Court opinion on deemed foreign dividends under the Tax Cuts and Jobs Act, together with higher state taxes from a California deferred-tax-asset valuation allowance adjustment. Gross unrecognized tax benefits were $2.5 billion at July 25, 2026, including $1.7 billion that would affect the effective tax rate if recognized. The company also recorded $1.4 billion of valuation allowance against deferred tax assets, up $0.5 billion, primarily because future California taxable income is expected to be insufficient to use accumulated credits and net operating loss carryforwards.
Key facts
- Gross deferred tax assets were $11.2 billion as of July 25, 2026 and the valuation allowance against these deferred tax assets was $1.4 billion, representing a $0.5 billion increase during fiscal 2026. source
- As of July 25, 2026, gross unrecognized tax benefits were $2.5 billion, reflecting a $0.2 billion increase during fiscal 2026, of which $1.7 billion would impact the effective tax rate if recognized. source
- Our effective tax rate was 17.1% in fiscal 2026, 8.3% in fiscal 2025, and 15.6% in fiscal 2024. source
- Noncurrent income taxes payable of approximately $2.3 billion and deferred tax liabilities of $85 million were presented as one aggregated amount in the total column due to uncertainty in timing. source
- Accrual for related interest and penalties was $539 million as of July 25, 2026. source
Impact estimates
| metric | direction | stage | expected | basis |
|---|---|---|---|---|
| net_income | negative | realized | -0.8% | Gross deferred tax assets were $11.2 billion as of July 25, 2026 and the valuation allowance against these deferred tax assets was $1.4… |
| assets | negative | realized | -0.4% | Gross deferred tax assets were $11.2 billion as of July 25, 2026 and the valuation allowance against these deferred tax assets was $1.4… |
| liability | negative | contingent | -0.2% | As of July 25, 2026, gross unrecognized tax benefits were $2.5 billion, reflecting a $0.2 billion increase during fiscal 2026, of which… |
| liability | negative | realized | -0.1% | As of July 25, 2026, gross unrecognized tax benefits were $2.5 billion, reflecting a $0.2 billion increase during fiscal 2026, of which… |