KLA Corporation Annual report [Section 13 and 15(d), not S-K Item 405]

Annual report [Section 13 and 15(d), not S-K Item 405]

INCOME TAXES (Tables)

INCOME TAXES (Tables)

12 Months Ended

Jun. 30, 2026

Schedule of Income before Income Taxes, Domestic and Foreign

The components of income before income taxes were as follows:


	Year Ended June 30,
(In thousands)	2026		2025		2024
Domestic income before income taxes	$	3,629,727	$	3,070,097	$	1,997,090
Foreign income before income taxes	1,976,198		1,574,351		1,192,942
Total income before income taxes	$	5,605,925	$	4,644,448	$	3,190,032

Schedule of Components of Income Tax Expense (Benefit)

The provision for income taxes was comprised of the following:


(In thousands)	Year Ended June 30,
	2026		2025		2024
Current:
Federal	$	330,215	$	624,002	$	395,876
State	9,621		21,161		10,737
Foreign	348,301		182,448		160,401
	688,137		827,611		567,014
Deferred:
Federal	80,690		(222,907)		(110,686)
State	952		(5,433)		(2,770)
Foreign	5,375		(16,466)		(25,422)
	87,017		(244,806)		(138,878)
Provision for income taxes	$	775,154	$	582,805	$	428,136

Schedule of Deferred Tax Assets and Liabilities

The significant components of deferred income tax assets and liabilities were as follows:


(In thousands)	As of June 30,
	2026		2025
Deferred tax assets:
Tax credits and net operating losses	$	364,290	$	327,618
Capitalized R&D expenses	361,467		447,043
Depreciation and amortization	220,997		190,256
Inventory reserves	144,298		135,121
Employee benefits accrual	125,406		106,746
Non-deductible reserves	63,679		69,790

Unearned revenue	52,454		48,372
SBC	19,978		18,835

Other	17,936		43,843
Gross deferred tax assets	1,370,505		1,387,624
Valuation allowance	(356,639)		(310,599)
Net deferred tax assets	$	1,013,866	$	1,077,025
Deferred tax liabilities:
Unremitted earnings of foreign subsidiaries not indefinitely reinvested	$	(411,657)	$	(360,544)
Deferred profit	(31,064)		(41,378)
Unrealized gain on investments	(7,569)		(16,278)

Total deferred tax liabilities	(450,290)		(418,200)
Total net deferred tax assets	$	563,576	$	658,825

Schedule of Effective Income Tax Rate Reconciliation

Beginning in the fiscal year ended June 30, 2026, we adopted ASU 2023-09 on a prospective basis. The reconciliation of the U.S. federal statutory income tax rate to our effective income tax rate pursuant to the disclosure requirements of ASU 2023-09 for the fiscal year ended June 30, 2026 was as follows:


(Dollar amounts in thousands)	Year Ended June 30, 2026
Federal statutory income tax rate	$	1,177,244	21.0	%
State and local income taxes, net of federal income tax effect(1)	8,553		0.2	%

Effect of cross border tax laws

FDII	(222,284)		(4.0)	%
Other	17,952		0.3	%
Tax credits



R&D credit	(59,203)		(1.0)	%
Other	(9,043)		(0.2)	%
Nontaxable or nondeductible items	12,380		0.2	%
Changes in unrecognized tax benefits	(8,439)		(0.2)	%
Other adjustments
SBC	(72,329)		(1.3)	%
Other	(4,499)		(0.1)	%
Foreign tax effects
Singapore

Tax incentives	(95,804)		(1.7)	%
Other(2)	(38,928)		(0.7)	%
China	48,337		0.9	%
Other jurisdictions	21,217		0.4	%

Effective income tax rate	$	775,154	13.8	%

________________

(1)Oregon makes up the majority of the effect of the state and local income tax category.

(2)Includes foreign tax rate differential.

The reconciliation of the U.S. federal statutory income tax rate to our effective income tax rate was as follows:


	Year Ended June 30,
	2025		2024
Federal statutory rate	21.0	%	21.0	%
GILTI	2.9	%	3.7	%
Goodwill impairment	1.1	%	1.7	%
Net change in tax reserves	0.3	%	1.1	%
State income taxes, net of federal benefit	0.3	%	0.3	%






FDII	(6.6)	%	(5.9)	%
Effect of foreign operations taxed at various rates	(5.1)	%	(6.6)	%
R&D tax credit	(1.1)	%	(1.6)	%
Other	(0.3)	%	(0.3)	%
Effective income tax rate	12.5	%	13.4	%

Schedule of Cash Paid for Income Taxes

Cash paid for income taxes, net of refunds received, by jurisdiction pursuant to the disclosure requirements of ASU 2023-09 for the year ended June 30, 2026 was as follows:


(In thousands)	Year Ended June 30, 2026
Federal	$	509,387
State	12,426
Foreign
China	91,214

Other	168,382
Cash paid for income taxes, net of refunds received	$	781,409

Reconciliation of Gross Unrecognized Tax Benefits

A reconciliation of gross unrecognized tax benefits was as follows:


	Year Ended June 30,
(In thousands)	2026		2025		2024
Unrecognized tax benefits at the beginning of the year	$	258,604	$	245,707	$	213,092

Increases for tax positions taken in current year	38,538		35,429		40,209
Increases for tax positions taken in prior years	10,685		10,862		23,291
Increases (decreases) for settlements with taxing authorities	1,808		(4,687)		—
Decreases for tax positions taken in prior years	(31,840)		(11,607)		(26,766)
Decreases for lapsing of statutes of limitations	(20,028)		(17,100)		(4,119)

Unrecognized tax benefits at the end of the year	$	257,767	$	258,604	$	245,707