LMT · 10-Q · 2026Q3 · Full report

Income Tax Rate Changes

LOCKHEED MARTIN CORP · 2026-10-22 · Importance 18 · Surprise 14

The effective tax rate for the nine months ended September 27, 2026 fell to 15.6% from 16.4% in 2025, and the quarterly rate declined to 15.1% from 16.5%. The rate decreases were primarily attributable to increased deductions for foreign-derived deduction-eligible income, partly offset by the absence of favorable resolution of federal tax audit items recorded in the prior year. The Tax Act and Treasury Notice 2026-7 mean the company is no longer subject to the corporate alternative minimum tax in 2026 and expects reduced federal income tax payments; lower tax payments also contributed to higher operating cash flow.

Key facts

• Final resolution of tax audits, administrative reviews, or litigation could increase tax expense and change tax-payment timing, potentially materially affecting financial condition and results for a reporting period. source
• Effective income tax rates were 15.1% for the quarter and 15.6% for the nine months ended September 27, 2026, versus 16.5% and 16.4%, respectively, in 2025. source
• The 2026 tax-rate decreases primarily reflected increased deductions for FDDEI, partly offset by the absence of the prior-year favorable resolution of certain federal income-tax audit items. source