Trump's tax breaks for big corporations

The federal corporate tax rate is 21%. But a lot of big companies — like Amazon, Meta, Alphabet, and Tesla — actually pay taxes at a much lower rate. In 2025, those four companies collectively paid 4.9%, according to the Institute on Taxation and Economic Policy.

This is not entirely new, but changes from President Donald Trump’s new tax and spending law, which was signed last summer, may be helping these companies get even bigger tax breaks.

For more, “Marketplace Morning Report” host Sabri Ben-Achour spoke with Matthew Gardner, a senior fellow at the Institute on Taxation and Economic Policy. The following is an edited transcript of their conversation.

Sabri Ben-Achour: Now, a lot of these tax breaks for major corporations come from President Trump's 2017 tax cuts. The recent tax and spending bill that was passed this summer adds more tax breaks. What are they?

Matthew Gardner: The two big ones are R&D expensing and bonus depreciation. R&D expensing just means that companies can write off all the research and development expense in the very first year rather than having to amortize them over time, as they had to before this year. The other one is bonus depreciation, which does the same thing — allows companies to immediately write off their capital expenses rather than depreciating them over time. And [it] does the same thing, not just for capital equipment — the machinery you're buying to make stuff — but also the buildings, the factories in which these things sit. Which means they're going to get a bonanza of tax cuts in the very first year, 2025 — enough to take away three-quarters of the tax they ought to be paying.

Ben-Achour: Is there a public policy argument for some of these tax breaks, like it would spur investment, increase spending, something like that?

Gardner: If you ask the folks who supported these changes and who pushed it through last year, what they would say, I think, is that bonus depreciation in particular is designed to encourage more capital investment, which then encourages economic growth. The difficulty with this argument is that no one's been able to find any econometric evidence showing conclusively that these rules actually encourage economic growth at all. If anything, the most obvious takeaway is that these tax breaks are simply rewarding companies for doing what they were going to do anyway.

Ben-Achour: You've written the Trump tax cuts have allowed companies to pay federal income tax at “record-low” rates. Like, how record low? How drastic are these tax breaks?

Gardner: I've never seen anything like this. It's entirely possible that when the dust is settled and you look at all the S&P 500 corporations — the companies that represent the lion's share of the U.S. economy — that these companies will overall be paying something less than 10% of their income in corporate taxes, which means they'd be sheltering more than half of their income from U.S. tax.