Over 100 Profitable Corporations, Including Tesla, Managed To Pay Zero Current Federal Income Tax

More than 100 profitable US corporations, including Tesla, Walt Disney and United Airlines, paid no current federal income tax in 2025, according to a report by the Institute on Taxation and Economic Policy (ITEP). The findings raise questions about corporate tax breaks and government revenue.

ITEP examined 706 profitable companies. Together, they reported $1.88 trillion (£1.40 trillion) in US profits but paid an average current federal income tax rate of 10.4 per cent, less than half the statutory 21 per cent rate.

A total of 114 companies paid no current federal income tax. Another 258 paid effective rates below 7 per cent, averaging just 1.7 per cent, according to ITEP's October 2026 analysis.

The figures reflect current federal income taxes disclosed in company financial reports, rather than final payments recorded by the Internal Revenue Service. Paying no current tax does not establish that a company broke the law.

Why Low Corporate Tax Payments Matter

ITEP estimated that the 706 companies received $198 billion (£147.8 billion) in federal tax subsidies by paying less than the statutory rate. The figures highlight how tax provisions can substantially reduce companies' current liabilities.

Matt Gardner, an ITEP senior fellow and report co-author, told Fortune that reduced rates among large corporations pose a broader concern than zero-tax cases alone. He argued that lower payments by highly profitable companies weaken the corporate tax system.

Corporate profits remain substantial. The US Bureau of Economic Analysis reported profits from current production at an annualised $4.71 trillion (£3.52 trillion) in the second quarter of 2026. This measure adjusts for inventory valuation and capital consumption.

The Congressional Budget Office estimated that the 2025 reconciliation law would increase the federal deficit by $3.4 trillion (£2.54 trillion) over 2025–2034, relative to its specified baseline. The estimate included $4.5 trillion (£3.36 trillion) in lower revenues, partly offset by $1.1 trillion (£821 billion) in reduced direct spending.

The Tax Breaks Behind Lower Bills

President Donald Trump's 2017 tax law reduced the federal corporate income tax rate from 35 per cent to 21 per cent. The One Big Beautiful Bill Act, signed in July 2025, expanded business tax benefits, including immediate deductions for qualifying domestic research and development expenses.

The law also restored 100 per cent bonus depreciation for qualifying property under applicable rules. These provisions can reduce taxable income, although eligibility depends on the circumstances and relevant tax requirements.

Alphabet, Microsoft, Amazon and Meta were among the largest beneficiaries of corporate tax subsidies identified by ITEP. The organisation estimated their combined subsidies at $68.9 billion (£51.4 billion) in 2025.

Meta has also faced questions about research tax credits. In October, seven Democratic senators asked chief executive Mark Zuckerberg whether the company claimed credits connected to AI data centre construction. They cited reports that certain facilities were treated as experimental pilot models.

The senators argued that research credits should encourage genuine innovation rather than subsidise established infrastructure. Their letter raised questions about Meta's eligibility but did not establish that the company had violated tax law.

Meta defended its research and development spending, telling Fortune that AI data centres require testing and experimentation. The company said its investment supports technological development.

The debate extends beyond individual companies. Critics argue that generous tax provisions reduce public revenue, while supporters say incentives encourage investment and economic growth. The central question is whether those benefits justify the revenue forgone.