Washington D.C — A recent article from the New York Times explores how the Republican Tax Law and tax loopholes are helping tech companies like Meta exploit the tax code to claim massive tax breaks for building data centers. By claiming that data centers are “pilot models” worthy of receiving research and experimentation tax credits, Meta avoided paying $4 billion in taxes in last year alone. Meanwhile, these data centers are also raising working families’ energy bills nationwide.
This is part of a pattern: a recent POLITICO article highlighted that Big Tech companies, including Meta, are taking advantage of tax breaks and raking in billions of dollars – including from tax breaks from the Republican Tax Law, which are making this problem even worse. An analysis from ITEP also reports four big tech companies, including Meta, avoided collectively paying $51 billion in federal tax income in 2025, taking advantage of the Republican Tax Law that was signed earlier that year.
While millions of families are struggling to pay for their energy bills as data centers skyrocket energy costs and millions of Americans are getting cut from Medicaid coverage and SNAP due to the Republican Tax Law, large corporations like Meta continue to exploit tax breaks from the very same law.
New York Times: How Meta Uses A.I. Data Centers to Avoid Billions in Federal Taxes
Key Points:
- Mark Zuckerberg says Meta’s A.I. push is a tremendous success. “Our investments in A.I. are accelerating every major part of our core business,” he has told investors. “Every sign that we’re seeing in our own work and across the industry gives us confidence in this investment.”
- But when Meta files its taxes, it tells the Internal Revenue Service a different story. It claims that its A.I. data centers are a giant experiment that could fail, according to four people with knowledge of the company’s operations.
- It does this so it can tap into a tax credit intended for research and experimentation. It’s an aggressive interpretation of the tax break, which Meta embraced to claim billions of dollars in tax credits for data center expansion.
- Here’s what Meta is doing: For tax purposes, the company classifies its enormous, multibillion-dollar data centers as “pilot models.” Under a tax credit created in the 1980s to spur innovation, companies can get a rebate for supplies, but only if they are being tested in an experimental effort, not standard business operations. Meta is claiming that the costly A.I. computer chips it buys from companies, including Nvidia, are entitled to a taxpayer-provided discount as part of the experiment.
- Meta’s use of the tax break for the data centers has not been previously reported. The New York Times reviewed securities filings and conducted multiple interviews, including with the people familiar with Meta’s operations, who spoke on the condition of anonymity to discuss proprietary matters.
- The social media company’s stock is soaring, and it is now worth nearly $2 trillion thanks in part to how its A.I. efforts have improved Instagram, WhatsApp and Facebook. This month, Meta released Muse, a personal A.I. agent that immediately became the most downloaded app for iPhone and Android users. Meta and other tech giants’ A.I. efforts have also been helped by an accelerated write-off for research and development expenses that stemmed from the One Big Beautiful Bill Act, passed in 2025.
- The credit is meant to spur innovation by encouraging companies to tackle unsolved problems and technical challenges. While Meta is testing different physical layouts for server racks and looking for the best way to network thousands of chips for A.I. training, the chips themselves are known to work. They have been at the center of A.I.’s progress for the last decade and turned Nvidia into the world’s most valuable company.
- The strategy has been lucrative. Meta said the research tax credit shaved $2 billion off its taxes in 2024, and then $3.9 billion in 2025. That is a significant increase from the $700 million the company reported in 2023, the year before it embarked on its data center strategy.
- Since Meta began its research credit A.I. strategy, the amount set aside to cover those tax bets increased 45 percent — to $18.74 billion today from $12.9 billion two years ago. The contributing factor listed first in its annual financial filing is “uncertainties with our research tax credits.”
- “Meta is claiming billions of dollars in tax benefits that its own accountants are telling investors are at risk of being overturned by the I.R.S.,” said Lisa De Simone, a former tax adviser at EY who teaches accounting at the University of Texas business school.
- Meta declined to answer questions about what made its A.I. data centers experimental, and why tens of billions of dollars of chips and computing equipment qualified for the research tax credit.
- The credit has become the second-most expensive federal corporate tax break, behind only the reduced rate applied to offshore profits. In its most recent estimate, the congressional Joint Committee on Taxation projected the credit would cost the government $32.1 billion in 2025. Meta alone would be responsible for more than a tenth of that.
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Unrig Our Economy is a national campaign to fix the rules of our economy to make it work for working people. We know that when the middle class does well, all of us do well — which is why we’re fighting on behalf of working Americans and holding corporations, their wealthy executives, and the politicians who enable them accountable.