In 2017, the TCJA lowered headline corporate tax rates and expanded business tax benefits. Federal corporate tax receipts, however, remained largely buoyant, fueled in part by record-setting post-pandemic growth among large companies. Then, the OBBBA doubled down on tax benefits for investment and R&D, while loosening guardrails such as limitations on interest expense deductions. Has the fiscal bill finally come due?
From the Institute on Taxation and Economic Policy, four coauthors report that 706 profitable U.S. corporations collectively reported current federal income tax expense equal to 10.4% of their $1.88 trillion in domestic profits in 2025—half of the post-TCJA headline rate of 21%. Of those companies, 114 reported no current federal income tax expense. These numbers come from financial statements, with all of the usual qualifiers.
This effective tax rate is the lowest in four decades of ITEP’s tracking of these data—and almost a full percentage point below the post-ERTA tax cuts in 1982, which included the first full year of companies’ tax benefits from the law’s short-lived safe-harbor leasing regime (and the late-1981 surge to plan into those benefits). Statutory corporate rates were higher then, but a new minimum remains remarkable.
What’s driving this finding, plus links and press coverage, below the fold.
The more interesting finding isn’t companies’ effective rate (which depends on significant methodological assumptions) or which companies didn’t pay current tax (which catches media coverage). Across this population, the ITEP report finds tax benefits concentrated among just a handful of taxpayers. Just twenty-five corporations—including big-name tech companies with heavy AI investment—accounted for more than half of the $198 billion in tax benefits identified by the report. Six of these represented more than 40% of these tax benefits.
The ITEP report’s definition of tax benefits is mechanical, rather than direct. The authors look to the difference between the 21% statutory rate and companies’ imputed effective rate based on financial statement income, which is blunt but indicative. To the extent that the gap between statutory and imputed effective rates reflect bonus depreciation or R&D expensing, however, these benefits operate on timing and may yield higher corporate tax receipts in later years. Notably, however, this feature didn’t save the ERTA’s benefit regimes. Finally, texture matters: if the high-benefit companies in ITEP’s report are making bigger investments (think: AI) or reporting greater pretax profits (they generally are), then the concentration of lower effective tax rates may not be disproportionate to economic activity. Still, the report speaks to emerging economic patterns that warrant monitoring as the OBBBA’s changes settle into equilibrium.
Links to the report, an ITEP blog post, and media coverage:
Matthew Gardner, Steve Wamhoff, Joe Hughes, & Spandan Marasini, After Two Rounds of Trump Tax Cuts, Corporate America Paid Less Than Ever in 2025, Inst. on Tax’n & Econ. Pol’y (Oct. 22, 2026)
Matthew Gardner, Bigger Corporations, Bigger Tax Breaks: Consolidation Leads Six Corporations to Grab a Giant Share of Subsidies, ITEP Blog (Oct. 28, 2026)
Michael Rapoport, Data-Center Spenders Save Billions from Depreciation Tax Break, Bloomberg Tax (Sept. 28, 2026) (interviewing ITEP report coauthor Matthew Gardner)
Sasha Rogelberg, Tesla and 113 Other Companies Paid No Current Federal Income Tax, but They Still Aren’t the Biggest Threats to the Federal Deficit, Think Tank Warns, Fortune (Oct. 30, 2026) (reprinted at Yahoo! Finance)
Daniel de Visé, More Than 100 Big Companies Paid No Federal Income Tax in 2025, USA Today (Oct. 29, 2026)
Wailin Wong, Alex Mayyasi, Ricky Mulvey, Angel Carreras, Julia Ritchey & Kate Concannon, Corporate Tax Cheats, Recession Deal Eats and Costly Halloween Treats!, The Indicator from Planet Money, Nat’l Pub. Radio (Oct. 30, 2026)
Related TaxProf Blog coverage:
- How Meta Uses A.I. Data Centers to Avoid Billions in Federal Taxes (Oct. 12, 2026)
- Is the AI Boom Hollowing Out Corporate Tax Receipts? (Sept. 19, 2026)
- SSRN Review & Roundup: Eyal Reviews Harpaz’s Taxing AI (Mar. 6, 2026)
- GAO: Two-Thirds of All Active Corporations Paid Zero Federal Income Tax (Mar. 26, 2016)
