If you paid federal income tax for the 2025 tax year, there’s a good chance you paid a higher rate than Amazon.
That’s not a guess. Amazon disclosed about $1.22 billion in current federal income tax for 2025, according to a new analysis by the Institute on Taxation and Economic Policy (ITEP). That works out to a tax rate of roughly 1% on its U.S. profits.
And ITEP says the real figure is likely closer to zero.
The average American taxpayer paid 14.1% in 2023, the latest year of IRS data, according to the Tax Foundation. Even the bottom half of taxpayers, those with income under about $53,800, averaged 3.7%.
And Amazon has plenty of company. ITEP studied 706 big, profitable corporations from the Fortune 1000 and S&P 500. Together, they paid federal income tax equal to just 10.4% of $1.88 trillion in U.S. profits in 2025. The official corporate rate is 21%.
ITEP says that’s the lowest rate it has seen in four decades of tracking corporate taxes. And 114 of those companies paid nothing at all.
The zero club is full of household names. Tesla earned $5.7 billion in the U.S. and paid nothing. Walt Disney, Citigroup and United Airlines paid zero, too. So did H&R Block. Yes, the tax preparer.
A word about the source. ITEP calls itself nonpartisan, but it’s generally seen as left-leaning, and it pushes to close corporate tax breaks. Still, these figures aren’t opinions. They come from the annual financial reports these companies file with the Securities and Exchange Commission.
I’ve been a CPA since 1981, and here’s what matters most: Congress wrote the breaks behind these numbers. Companies just use them. Here are five that stand out, what we know they cost, and which ones you can use too.
1. Write off equipment all at once
Normally, when a business buys equipment, it deducts the cost a little at a time over several years. That’s called depreciation.
President Donald Trump’s 2017 tax law let companies write off the whole cost in the first year, but only temporarily. His 2025 law, the One Big Beautiful Bill Act, made that permanent for qualified property acquired after Jan. 19, 2025, according to the IRS.
The result: A very profitable company can look like it barely made a dime at tax time, as long as it keeps buying equipment and building factories. ITEP found depreciation breaks saved the firms in its study $88 billion or more in 2025.
Can you use it? Yes, if you run a business, including a side gig. Buy qualifying equipment for that business, and you may be able to deduct the full cost this year.
Just don’t buy something you don’t need to get a write-off. A $2,000 deduction doesn’t save you $2,000. In the 22% federal bracket, it saves about $440 in income tax.
2. Get paid for ‘research’
The federal research credit comes straight off a company’s tax bill. The companies in ITEP’s study saved $22 billion with it in 2025.
Not all of that research is curing diseases. ITEP says the credit effectively handed Airbnb $121 million in 2025 — for improving its website.
Then there’s Meta. A New York Times report cited by ITEP found the company claiming the credit for ordinary spending to outfit its data centers. A bipartisan group of lawmakers has pressed the Treasury secretary for an explanation. I dug into that fight in “Companies Earn More, Pay Less Tax.”
On top of the credit, the 2025 law lets companies deduct research spending right away instead of spreading it out over years. ITEP identified more than $37 billion in 2025 tax breaks from that provision alone.
Can you use it? Not unless your business does real research and development.
3. Deduct the boss’s stock options
When companies pay top executives in stock options, they can deduct far more on their tax returns than they report as an expense to investors, according to ITEP.
ITEP puts the cost of that break at $22 billion or more for the firms it studied. Most of the benefit lands with a handful of hugely profitable tech companies.
Can you use it? No. This break goes to the company, not to you.
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4. The restaurant tip trick
This one surprised me. ITEP found eight big restaurant chains you’d recognize from any strip mall kept roughly 75% of their U.S. profits away from federal income tax in 2025.
Their main tool is an old tax credit for the payroll taxes employers pay on workers’ tips. It was designed back when tips were paid in cash, to get companies to track and report them.
ITEP’s point: More and more tips go on credit cards now, so they get recorded anyway. And workers now have their own tip deduction. Yet the employer credit lives on.
Can you use it? Sort of. If you work for tips, you may be able to deduct up to $25,000 a year in qualified tips under the new “no tax on tips” rule, according to the IRS.
The deduction phases out once your modified adjusted gross income tops $150,000, or $300,000 for joint filers.
For more breaks Congress added in 2025, see “I’m a CPA. Here Are 7 New Tax Breaks Most People Will Miss in 2026.”
5. Call it foreign income
Trump’s 2017 law created a special deduction for profits from foreign sales of products and services that use U.S.-held patents and trademarks. The 2025 law tweaked it and gave it a new name.
Those profits get taxed at a rate far below 21%. ITEP says the break saved the firms it studied $18 billion or more in 2025. It adds that spotty disclosure means the real cost is likely far larger.
Can you use it? No. Only regular corporations, not individuals or most small businesses, can claim it.
Is this a scandal or just timing?
To be fair, there’s another side. The Tax Foundation, a think tank that supports full write-offs for business investment, says low corporate tax payments right now mostly reflect a change in the timing of deductions.
The logic: Write off a machine all at once today, and there’s nothing left to deduct for it later. The Tax Foundation expects corporate tax revenue to dip for the next few years, then stabilize by the end of the decade.
My take as a CPA: That’s fair as far as it goes. But a company that spends more every year keeps pushing its tax bill down the road.
And the research credit, the stock-option deduction and the foreign-sales break aren’t about timing. That money doesn’t come back later.
Who covers the difference
When companies pay less, the money has to come from somewhere: other taxpayers, spending cuts or more borrowing.
Social Security runs mainly on payroll taxes, not corporate income taxes. But it’s the same Congress, and it faces a deadline. Social Security’s retirement trust fund is projected to run dry in late 2032, after which it could pay only 78% of scheduled benefits, according to the program’s trustees.
Here’s why that cut could come sooner than you think.
Democrats won both chambers of Congress in the 2026 midterms. But any change to these corporate breaks still needs Trump’s signature or enough votes to override a veto.
What you can do about it
You can’t rewrite the tax code. But you can stop leaving money on the table.
Claim every break you qualify for. Big companies don’t skip a single one. Neither should you.
Own the companies. If you have a total-market or S&P 500 index fund in your 401(k) or IRA, you own a slice of Amazon, Microsoft and Meta. That means you share in the profits these breaks protect. Here are five ways to own a bigger share.
And speak up. Tell your representatives what you think. Lobbyists show up every day. Plenty of voters never do.
Bottom line: The companies aren’t the villains here. They’re following rules Congress wrote. But when a tax preparer pays a lower rate than many of its own customers, it’s fair to ask who those rules were written for.
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