MSFT · 10-K · 2026A · Full report
Income Tax Rate Changes
MICROSOFT CORP · 2026-07-29 · Importance 18 · Surprise 14
Microsoft’s effective tax rate increased to 19% in fiscal 2026 from 18% in fiscal 2025. The increase primarily reflected changes in the mix of earnings and tax expenses between the United States and foreign countries. Fiscal 2026 income before taxes included $103.6 billion of U.S. income and $62.3 billion of foreign income, compared with $69.2 billion and $54.4 billion, respectively, in fiscal 2025. Foreign earnings taxed at lower rates, including earnings produced and distributed through Microsoft’s Ireland regional operations center, continued to reduce the effective rate below the U.S. federal statutory rate.