Income Tax Expense (Benefit)
Effective Income Tax Rate (EITR)
Components of Deferred Tax Assets and Liabilities
Deferred Tax Assets and Liabilities, Classification
Adjustments to Financial Statements: Removal of Deferred Taxes
Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)
Adjusted Net Profit Margin
Adjusted Total Asset Turnover
Adjusted Financial Leverage
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

Microsoft Corp., income tax expense (benefit), continuing operations

US$ in millions

12 months ended:	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019
U.S. federal	12,165)	14,009)	8,329)	3,285)	3,537)	4,718)
U.S. state and local	2,366)	2,322)	1,679)	1,229)	763)	662)
Foreign	9,858)	6,678)	6,672)	5,467)	4,444)	5,531)
Current taxes	24,389)	23,009)	16,680)	9,981)	8,744)	10,911)
U.S. federal	(4,791)	(6,146)	(4,815)	25)	58)	(5,647)
U.S. state and local	(379)	(477)	(1,062)	(204)	(6)	(1,010)
Foreign	432)	564)	175)	29)	(41)	194)
Deferred taxes	(4,738)	(6,059)	(5,702)	(150)	11)	(6,463)
Provision for income taxes	19,651)	16,950)	10,978)	9,831)	8,755)	4,448)

Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).

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Item	Description	The company
Current taxes	Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations.	Microsoft Corp. current taxes increased from 2022 to 2023 and from 2023 to 2024.
Deferred taxes	Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations.	Microsoft Corp. deferred taxes decreased from 2022 to 2023 but then increased from 2023 to 2024 exceeding 2022 level.
Provision for income taxes	Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.	Microsoft Corp. provision for income taxes increased from 2022 to 2023 and from 2023 to 2024.

Microsoft Corp., effective income tax rate (EITR) reconciliation

	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019
U.S. federal statutory tax rate	21.00%	21.00%	21.00%	21.00%	21.00%	21.00%
Foreign earnings taxed at lower rates	-1.40%	-1.80%	-1.30%	-2.70%	-3.70%	-4.10%
Impact of intangible property transfers	0.00%	0.00%	-3.90%	0.00%	0.00%	-5.90%
Foreign-derived intangible income deduction	-1.10%	-1.30%	-1.10%	-1.30%	-1.10%	-1.40%
State income taxes, net of federal benefit	1.50%	1.60%	1.40%	1.40%	1.30%	0.70%
Research and development credit	-1.10%	-1.10%	-0.90%	-0.90%	-1.10%	-1.10%
Excess tax benefits relating to stock-based compensation	-1.10%	-0.70%	-1.90%	-2.40%	-2.20%	-2.20%
Interest, net	1.10%	0.80%	0.50%	0.50%	1.00%	1.00%
Other reconciling items, net	-0.70%	0.50%	-0.70%	-1.80%	1.30%	1.80%
Effective tax rate, before impact of the enactment of the TCJA	18.20%	19.00%	13.10%	13.80%	16.50%	9.80%
Impact of the enactment of the TCJA	0.00%	0.00%	0.00%	0.00%	0.00%	0.40%
Effective tax rate	18.20%	19.00%	13.10%	13.80%	16.50%	10.20%

Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).

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Item	Description	The company
Effective tax rate, before impact of the enactment of the TCJA	Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.	Microsoft Corp. effective tax rate, before impact of the enactment of the TCJA increased from 2022 to 2023 but then slightly decreased from 2023 to 2024.

Microsoft Corp., components of deferred tax assets and liabilities

US$ in millions

	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019
Stock-based compensation expense	765)	681)	601)	502)	461)	406)
Accruals, reserves, and other expenses	4,381)	3,131)	2,874)	2,960)	2,721)	2,287)
Loss and credit carryforwards	1,741)	1,441)	1,546)	1,090)	865)	3,518)
Amortization	4,159)	9,440)	10,183)	6,346)	6,361)	7,046)
Leasing liabilities	6,504)	5,041)	4,557)	4,060)	3,025)	1,594)
Unearned revenue	3,717)	3,296)	2,876)	2,659)	1,553)	475)
Book/tax basis differences in investments and debt	9)	373)	—)	—)	—)	—)
Capitalized research and development	11,442)	6,958)	473)	—)	—)	—)
Other	426)	489)	461)	543)	354)	367)
Deferred income tax assets	33,144)	30,850)	23,571)	18,160)	15,340)	15,693)
Valuation allowance	(1,045)	(939)	(1,012)	(769)	(755)	(3,214)
Deferred income tax assets, net of valuation allowance	32,099)	29,911)	22,559)	17,391)	14,585)	12,479)
Book/tax basis differences in investments and debt	—)	—)	(174)	(2,605)	(2,642)	(738)
Unearned revenue	—)	—)	—)	—)	—)	(30)
Leasing assets	(6,503)	(4,680)	(4,291)	(3,834)	(2,817)	(1,510)
Depreciation	(3,940)	(2,674)	(1,602)	(1,010)	—)	—)
Deferred tax on foreign earnings	(1,837)	(2,738)	(3,104)	(2,815)	(2,581)	(2,607)
Other	(167)	(89)	(103)	(144)	(344)	(291)
Deferred income tax liabilities	(12,447)	(10,181)	(9,274)	(10,408)	(8,384)	(5,176)
Net deferred income tax assets (liabilities)	19,652)	19,730)	13,285)	6,983)	6,201)	7,303)

Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).

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Item	Description	The company
Deferred income tax assets	Amount before allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards.	Microsoft Corp. deferred income tax assets increased from 2022 to 2023 and from 2023 to 2024.
Deferred income tax assets, net of valuation allowance	Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards.	Microsoft Corp. deferred income tax assets, net of valuation allowance increased from 2022 to 2023 and from 2023 to 2024.
Net deferred income tax assets (liabilities)	Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, without jurisdictional netting.	Microsoft Corp. net deferred income tax assets (liabilities) increased from 2022 to 2023 but then slightly decreased from 2023 to 2024.

Microsoft Corp., deferred tax assets and liabilities, classification

US$ in millions

		Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019
	Long-term deferred income tax assets (included in Other long-term assets)	22,270)	20,163)	13,515)	7,181)	6,405)	7,536)
	Long-term deferred income tax liabilities	2,618)	433)	230)	198)	204)	233)

Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).

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Item	Description	The company
Long-term deferred income tax assets (included in Other long-term assets)	Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, with jurisdictional netting and classified as noncurrent.	Microsoft Corp. long-term deferred income tax assets (included in Other long-term assets) increased from 2022 to 2023 and from 2023 to 2024.
Long-term deferred income tax liabilities	Amount, after deferred tax asset, of deferred tax liability attributable to taxable differences, with jurisdictional netting and classified as noncurrent.	Microsoft Corp. long-term deferred income tax liabilities increased from 2022 to 2023 and from 2023 to 2024.

Microsoft Corp., adjustments to financial statements

US$ in millions

	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019
Adjustment to Total Assets
Total assets (as reported)	512,163)	411,976)	364,840)	333,779)	301,311)	286,556)
Less: Noncurrent deferred tax assets, net	22,270)	20,163)	13,515)	7,181)	6,405)	7,536)
Total assets (adjusted)	489,893)	391,813)	351,325)	326,598)	294,906)	279,020)
Adjustment to Total Liabilities
Total liabilities (as reported)	243,686)	205,753)	198,298)	191,791)	183,007)	184,226)
Less: Noncurrent deferred tax liabilities, net	2,618)	433)	230)	198)	204)	233)
Total liabilities (adjusted)	241,068)	205,320)	198,068)	191,593)	182,803)	183,993)
Adjustment to Stockholders’ Equity
Stockholders’ equity (as reported)	268,477)	206,223)	166,542)	141,988)	118,304)	102,330)
Less: Net deferred tax assets (liabilities)	19,652)	19,730)	13,285)	6,983)	6,201)	7,303)
Stockholders’ equity (adjusted)	248,825)	186,493)	153,257)	135,005)	112,103)	95,027)
Adjustment to Net Income
Net income (as reported)	88,136)	72,361)	72,738)	61,271)	44,281)	39,240)
Add: Deferred income tax expense (benefit)	(4,738)	(6,059)	(5,702)	(150)	11)	(6,463)
Net income (adjusted)	83,398)	66,302)	67,036)	61,121)	44,292)	32,777)

Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).

Microsoft Corp., Financial Data: Reported vs. Adjusted

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Microsoft Corp., adjusted financial ratios

	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019
Net Profit Margin
Reported net profit margin	35.96%	34.15%	36.69%	36.45%	30.96%	31.18%
Adjusted net profit margin	34.02%	31.29%	33.81%	36.36%	30.97%	26.05%
Total Asset Turnover
Reported total asset turnover	0.48	0.51	0.54	0.50	0.47	0.44
Adjusted total asset turnover	0.50	0.54	0.56	0.51	0.48	0.45
Financial Leverage
Reported financial leverage	1.91	2.00	2.19	2.35	2.55	2.80
Adjusted financial leverage	1.97	2.10	2.29	2.42	2.63	2.94
Return on Equity (ROE)
Reported ROE	32.83%	35.09%	43.68%	43.15%	37.43%	38.35%
Adjusted ROE	33.52%	35.55%	43.74%	45.27%	39.51%	34.49%
Return on Assets (ROA)
Reported ROA	17.21%	17.56%	19.94%	18.36%	14.70%	13.69%
Adjusted ROA	17.02%	16.92%	19.08%	18.71%	15.02%	11.75%

Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).

Financial ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by total revenue.	Microsoft Corp. adjusted net profit margin ratio deteriorated from 2022 to 2023 but then improved from 2023 to 2024 exceeding 2022 level.
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Microsoft Corp. adjusted total asset turnover ratio deteriorated from 2022 to 2023 and from 2023 to 2024.
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Microsoft Corp. adjusted financial leverage ratio decreased from 2022 to 2023 and from 2023 to 2024.
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	Microsoft Corp. adjusted ROE deteriorated from 2022 to 2023 and from 2023 to 2024.
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	Microsoft Corp. adjusted ROA deteriorated from 2022 to 2023 but then slightly improved from 2023 to 2024.

Microsoft Corp., Financial Ratios: Reported vs. Adjusted

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	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019
As Reported
Selected Financial Data (US$ in millions)
Net income	88,136)	72,361)	72,738)	61,271)	44,281)	39,240)
Revenue	245,122)	211,915)	198,270)	168,088)	143,015)	125,843)
Profitability Ratio
Net profit margin¹	35.96%	34.15%	36.69%	36.45%	30.96%	31.18%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income	83,398)	66,302)	67,036)	61,121)	44,292)	32,777)
Revenue	245,122)	211,915)	198,270)	168,088)	143,015)	125,843)
Profitability Ratio
Adjusted net profit margin²	34.02%	31.29%	33.81%	36.36%	30.97%	26.05%

Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).

2024 Calculations

¹ Net profit margin = 100 × Net income ÷ Revenue
= 100 × 88,136 ÷ 245,122 = 35.96%

² Adjusted net profit margin = 100 × Adjusted net income ÷ Revenue
= 100 × 83,398 ÷ 245,122 = 34.02%

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Profitability ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by total revenue.	Microsoft Corp. adjusted net profit margin ratio deteriorated from 2022 to 2023 but then improved from 2023 to 2024 exceeding 2022 level.

	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019
As Reported
Selected Financial Data (US$ in millions)
Revenue	245,122)	211,915)	198,270)	168,088)	143,015)	125,843)
Total assets	512,163)	411,976)	364,840)	333,779)	301,311)	286,556)
Activity Ratio
Total asset turnover¹	0.48	0.51	0.54	0.50	0.47	0.44
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Revenue	245,122)	211,915)	198,270)	168,088)	143,015)	125,843)
Adjusted total assets	489,893)	391,813)	351,325)	326,598)	294,906)	279,020)
Activity Ratio
Adjusted total asset turnover²	0.50	0.54	0.56	0.51	0.48	0.45

Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).

2024 Calculations

¹ Total asset turnover = Revenue ÷ Total assets
= 245,122 ÷ 512,163 = 0.48

² Adjusted total asset turnover = Revenue ÷ Adjusted total assets
= 245,122 ÷ 489,893 = 0.50

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Activity ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Microsoft Corp. adjusted total asset turnover ratio deteriorated from 2022 to 2023 and from 2023 to 2024.

	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019
As Reported
Selected Financial Data (US$ in millions)
Total assets	512,163)	411,976)	364,840)	333,779)	301,311)	286,556)
Stockholders’ equity	268,477)	206,223)	166,542)	141,988)	118,304)	102,330)
Solvency Ratio
Financial leverage¹	1.91	2.00	2.19	2.35	2.55	2.80
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted total assets	489,893)	391,813)	351,325)	326,598)	294,906)	279,020)
Adjusted stockholders’ equity	248,825)	186,493)	153,257)	135,005)	112,103)	95,027)
Solvency Ratio
Adjusted financial leverage²	1.97	2.10	2.29	2.42	2.63	2.94

Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).

2024 Calculations

¹ Financial leverage = Total assets ÷ Stockholders’ equity
= 512,163 ÷ 268,477 = 1.91

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted stockholders’ equity
= 489,893 ÷ 248,825 = 1.97

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Solvency ratio	Description	The company
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Microsoft Corp. adjusted financial leverage ratio decreased from 2022 to 2023 and from 2023 to 2024.

	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019
As Reported
Selected Financial Data (US$ in millions)
Net income	88,136)	72,361)	72,738)	61,271)	44,281)	39,240)
Stockholders’ equity	268,477)	206,223)	166,542)	141,988)	118,304)	102,330)
Profitability Ratio
ROE¹	32.83%	35.09%	43.68%	43.15%	37.43%	38.35%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income	83,398)	66,302)	67,036)	61,121)	44,292)	32,777)
Adjusted stockholders’ equity	248,825)	186,493)	153,257)	135,005)	112,103)	95,027)
Profitability Ratio
Adjusted ROE²	33.52%	35.55%	43.74%	45.27%	39.51%	34.49%

Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).

2024 Calculations

¹ ROE = 100 × Net income ÷ Stockholders’ equity
= 100 × 88,136 ÷ 268,477 = 32.83%

² Adjusted ROE = 100 × Adjusted net income ÷ Adjusted stockholders’ equity
= 100 × 83,398 ÷ 248,825 = 33.52%

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Profitability ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	Microsoft Corp. adjusted ROE deteriorated from 2022 to 2023 and from 2023 to 2024.

	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019
As Reported
Selected Financial Data (US$ in millions)
Net income	88,136)	72,361)	72,738)	61,271)	44,281)	39,240)
Total assets	512,163)	411,976)	364,840)	333,779)	301,311)	286,556)
Profitability Ratio
ROA¹	17.21%	17.56%	19.94%	18.36%	14.70%	13.69%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income	83,398)	66,302)	67,036)	61,121)	44,292)	32,777)
Adjusted total assets	489,893)	391,813)	351,325)	326,598)	294,906)	279,020)
Profitability Ratio
Adjusted ROA²	17.02%	16.92%	19.08%	18.71%	15.02%	11.75%

Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).

2024 Calculations

¹ ROA = 100 × Net income ÷ Total assets
= 100 × 88,136 ÷ 512,163 = 17.21%

² Adjusted ROA = 100 × Adjusted net income ÷ Adjusted total assets
= 100 × 83,398 ÷ 489,893 = 17.02%

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Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	Microsoft Corp. adjusted ROA deteriorated from 2022 to 2023 but then slightly improved from 2023 to 2024.

Microsoft Corp. (NASDAQ:MSFT)

Analysis of Income Taxes

Income Tax Expense (Benefit)

Effective Income Tax Rate (EITR)

Components of Deferred Tax Assets and Liabilities

Deferred Tax Assets and Liabilities, Classification

Adjustments to Financial Statements: Removal of Deferred Taxes

Microsoft Corp., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

Microsoft Corp., Financial Ratios: Reported vs. Adjusted

Adjusted Net Profit Margin

Adjusted Total Asset Turnover

Adjusted Financial Leverage

Adjusted Return on Equity (ROE)

Adjusted Return on Assets (ROA)