CSCO · 10-Q · 2026Q2 · Full report

Income Tax Rate Changes

CISCO SYSTEMS, INC. · 2026-05-19 · Importance 59 · Surprise 82 · Matches filing data

Cisco’s third-quarter effective tax rate increased to 16.5% from 15.5%, primarily because of a lower foreign-derived intangible income deduction, partly offset by a higher research tax credit benefit. The nine-month effective tax rate increased to 15.1% from 5.8%. The year-to-date rate comparison was affected by a $720 million tax benefit recognized in the first quarter of fiscal 2025 following a U.S. Tax Court opinion on deemed foreign dividends from fiscal 2018. The higher fiscal 2026 rate reduced the year-over-year earnings comparison despite revenue and operating-margin growth.

Key facts

• The net cash provided by operating activities in the first nine months of fiscal 2026 includes a final U.S. transition tax payment of $2.3 billion. source
• Our effective tax rate was 15.1% for the first nine months of fiscal 2026 and 5.8% for the first nine months of fiscal 2025. source
• The increase in the first nine months' effective tax rate was primarily due to a $720 million tax benefit related to a U.S. Tax Court opinion in the first quarter of fiscal 2025. source
• Our effective tax rate was 16.5% in the third quarter of fiscal 2026 and 15.5% in the third quarter of fiscal 2025. source

Impact estimates