QCOM · 10-K · 2026A · Full report

U.S. Tax Law Changes

QUALCOMM INC/DE · 2026-11-04 · Importance 65 · Surprise 60

The One Big Beautiful Bill Act (OBBB), enacted in the United States in the fourth quarter of fiscal 2025, changed the foreign-derived deduction eligible income (FDDEI) regime and allowed domestic research and development expenditures to be deducted as incurred beginning in fiscal 2026. Qualcomm initially expected to be perpetually subject to the corporate alternative minimum tax (CAMT) and recorded a $5.7 billion valuation allowance on federal deferred tax assets in fiscal 2025. In the second quarter of fiscal 2026, U.S. Treasury and IRS Notice 2026-07 allowed certain previously capitalized domestic R&D expenditures to reduce CAMT; Qualcomm then released the allowance and recorded a $5.7 billion income tax benefit. The OBBB’s R&D deduction provisions also reduced cash tax payments and favorably affected operating cash flow in fiscal 2026, with lower cash tax payments expected in future periods.

Key facts

• In the second quarter of fiscal 2026, Notice 2026-07 allowed QUALCOMM INC/DE to reduce CAMT by certain previously capitalized domestic R&D expenditures; QUALCOMM INC/DE no longer expected to be subject to CAMT in the foreseeable future and released its federal deferred tax asset valuation allowance, producing a $5.7 billion tax benefit. source
• QUALCOMM INC/DE established a $5.7 billion valuation allowance on federal deferred tax assets in fiscal 2025 because it expected to be perpetually subject to CAMT. source
• The OBBB provisions allowing domestic R&D expenditures to be deducted as incurred reduced QUALCOMM INC/DE's cash tax payments and favorably affected operating cash flow in fiscal 2026; QUALCOMM INC/DE expects these provisions to continue lowering cash tax payments in future periods. source
• The OBBB was enacted in the United States in the fourth quarter of fiscal 2025 and changed the FDDEI regime and allowed domestic R&D expenditures to be deducted as incurred beginning in fiscal 2026, rather than capitalized and amortized over five years. source
• QUALCOMM INC/DE paid $663 million as its final installment for a one-time U.S. repatriation tax accrued in fiscal 2018. source
• QUALCOMM INC/DE's fiscal 2026 benefits from the FDDEI deduction were lower than in fiscal 2025 because of changes to the current deduction of domestic R&D expenditures under the OBBB. source