Last year, corporations ran away with one of the biggest federal income tax breaks in history, thanks to rule changes, write-offs, and credits made permanent in President Trump’s One Big Beautiful Bill Act (OBBBA). According to a recent analysis by the Institute on Taxation and Economic Policy (ITEP), companies avoided paying more than $200 billion in federal income tax in 2025.
The latest cuts have helped dozens of corporations, like Tesla, CVS, and liquefied natural gas behemoth Cheniere, pay zero in federal income tax while raking in more than $100 billion, but the benefits have trickled up the most to just six companies, primarily Silicon Valley titans that are dominating the AI boom and spending lavishly on data centers.
Matthew Gardner, a senior fellow at ITEP and author of the institute’s latest report, estimates that Microsoft, Google-parent Alphabet, Amazon, Meta, JPMorgan Chase, and Nvidia, despite holding close to half a trillion dollars in cash reserves, together received $83 billion in federal income tax breaks last year, about 40 percent of the total granted to all corporations. What these hyperscalers and Jamie Dimon’s bank (which is deeply involved in financing data centers) saved in federal income taxes is equivalent to roughly one-fifth of what hundreds of thousands of other entities paid in federal corporate taxes in 2025.
Each company has blown past the previous single-year record set by JPMorgan Chase, an experienced tax harvester that got $5.2 billion in tax breaks in 2024. Microsoft eclipsed that figure last year by nearly fourfold, benefiting from almost $19 billion in relief. Each of the remaining five on the list did the same by similarly wide margins.
Clever accounting, greenlit by Congress, has helped the Big Tech giants secure those massive gains. They’ve claimed billions in tax credits for research and development and selling products built using their intellectual property abroad. They’ve leaned on stock options to compensate their employees, in order to deflate how the IRS calculates their profits. And the hyperscalers have been able to write off billions in capital expenditures on AI infrastructure like data centers essentially overnight, preemptively claiming the machines they’ve installed have undergone wear and tear, years before they actually have.
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That process, known as “bonus depreciation,” had been used by the feds to jump-start the economy at various points in the last 25 years, first in the aftermath of the 9/11 attacks, then during the recovery after the Great Recession. They began appearing outside of economic emergencies during the first Trump administration as part of another sweeping tax cut. That most recent measure was set to be phased out last year until OBBBA expanded and codified it forever, allowing companies to write off up to 100 percent of infrastructure investments in the first year of spending on them. That’s left a handful of highly profitable companies flush with tons of extra cash to continue building out more infrastructure, like data centers, power plants, and memory chips, reaping further tax credits down the line as they go.
According to Joe Hughes, a senior analyst at ITEP, of the hyperscalers at the top of the tax cut food chain, Microsoft has been the one to rely most heavily on the depreciation method to lower its tax bill, claiming close to $12 billion, followed by Amazon, which got $6.5 billion written off last year thanks to its investments in infrastructure. Meta, on the other hand, saw most of its tax break coming from research and development, to the tune of $12.6 billion, according to Hughes. Last year, the company reported that it had spent more than $57 billion on R&D. Nvidia and Alphabet, meanwhile, got the biggest windfalls from exporting products tied to their intellectual property, pulling in $4.2 billion and $3.9 billion, respectively, according to Hughes.
“The huge growth we’ve seen in the profits of just a couple of these Big Tech companies is like nothing we’ve ever seen before … and when a company is paying in the single digits or paying close to nothing at all, at some point this becomes an existential threat for the health of our corporate tax,” said Gardner, who led the recent analysis. “The real concern is not just that the evisceration of the corporate income tax is going to make it harder for the federal government to do things, it’s that if these tech leaders are taking the reins of political power as well, they can harness government for their own ends, and that’s profoundly concerning.”
