These highly profitable corporations paid zero federal income taxes last year

In 2025, Tesla reported $5.7 billion in U.S. profits. The company paid absolutely nothing in federal taxes.

To achieve this remarkable result, Tesla took advantage of several corporate tax breaks expanded or made permanent last summer as part of President Trump’s One Big Beautiful Bill (OBBB) — 100% bonus depreciation and immediate R&D expensing. It also generated savings by exploiting a long-standing deduction for executive stock options.

Tesla is not an anomaly. So far, 88 profitable corporations have reported paying $0 in federal income taxes last year, according to a new report by the Institute for Taxation and Economic Policy (ITEP). The list includes Citigroup ($4.45 billion in profits), CVS Health ($6.57 billion), GoDaddy ($981 million), Palantir ($1.58 billion), PayPal ($1.43 billion), Walt Disney ($8.3 billion), and Yum Brands, the parent company of KFC, Pizza Hut, and Taco Bell, ($1.03 billion).

The statutory tax rate on corporate profits is 21%. Collectively, the 88 companies in the ITEP report reported $105 billion in profits in 2025. That means, absent special breaks, they would have owed the federal government about $22.1 billion. Instead, these companies collectively “received $4.7 billion in tax rebates.”

Trump’s OBBB is accelerating an existing trend of lower corporate income tax payments to the federal government. The statutory federal corporate income tax rate was 53% in 1969, 34% after former President Reagan’s 1986 tax cut, and 21% after Trump’s first term.

While the statutory rate has remained unchanged since 2018, effective rates have continued to plummet due to a growing list of new tax breaks and loopholes. The effective tax rate paid by the average profitable corporation has fallen from 38% in the 1960s to 22% before Trump’s first term, and to about 12.8% after Trump’s first tax cut was passed in 2018.

The impact of the OBBB is still being assessed, but in 2025, four large tech firms — Meta, Alphabet, Tesla, and Amazon — paid an average rate of 4.9%.

This has massive consequences for the federal budget. In the 1950s, corporate income tax revenue accounted for nearly one-third of all revenues.

In 2025, corporate income taxes amounted to just 8.6% of revenue. The Treasury Department reported federal corporate income tax revenue fell 14.7% — a $77.8 billion drop from last year — even as overall federal revenue grew 6%. This year is projected to be even worse, with corporate tax revenue accounting for just 7% of total receipts.

Overall, the corporate tax breaks in OBBB, excluding those that primarily benefit small businesses, are expected to cost over $1 trillion over 10 years.

This is a policy choice. While Tesla paid nothing in U.S. federal income taxes in 2025, it paid over $1 billion in taxes to China and other foreign governments.

When corporations pay less in taxes, the benefits flow to shareholders — who are overwhelmingly wealthy and, increasingly, foreign. A stock in a corporation that pays little to no taxes on its profits is more valuable. In the United States, 58% of corporate stocks are owned by the richest 5% of households. Overall, 40% of stock in American corporations is owned by citizens of other countries. We are reducing tax revenue that could be used to benefit Americans to further enrich wealthy foreigners.

The truth about DoorDash Grandma

As corporations pay historically low tax rates — or nothing at all — Trump has pushed the narrative that American workers are thriving. Earlier this week, Trump had McDonald’s delivered to the White House through the food delivery app DoorDash to promote the “no tax on tips” policy that was also part of OBBB. The food was delivered by DoorDash worker Sharon Simmons, who was wearing a “DoorDash Grandma” t-shirt.

Simmons claimed that she saved thousands of dollars because of Trump’s no tax on tips policy. “Isn’t that incredible?” Trump said. “We call it the Great Big Beautiful Bill, we should call it the Great Big Beautiful Tax Cut Bill, because it’s tremendous amounts of money.” Trump said it was “pretty amazing.” Simmons agreed, saying, “Yes, it is.”

Most workers will see little to no benefit from the policy. Only a small percentage of all workers — about 2.5% according to the Yale Budget Lab — even receive tips. In 2022, 37% of tipped workers did not make enough money to owe federal income tax and therefore would not benefit from the policy. Simmons, who said she makes $11,000 annually in tips, may not benefit at all. She lives in Arkansas and was flown in for the event.

The biggest beneficiary is the employers of tipped workers, who now have a justification to “hold down or cut base wages.”

Overall, workers are being compensated at historically low rates. According to the Bureau of Labor Statistics, the “labor share” of Gross Domestic Product (GDP) in the U.S. “decreased to 53.8% in the third quarter of 2025,” the lowest level seen since 1947 when the Bureau first began recording labor share. In the fourth quarter of 2025, the labor share was only slightly higher, at 54.4%.

Many Americans have taken up gig work. A 2021 survey by the Pew Research Center found that 16% of Americans had “earned money through an online gig platform.” But gig workers have considerably less job stability and are not offered the same benefits as a traditional job. For example, gig workers often cannot set or negotiate their own rates, and do not get overtime pay or paid sick leave. According to a study from the U.C. Berkeley Labor Center, workers for rideshare and delivery apps also often earn below the minimum wage.

Simmons said that Trump’s no tax on tips policy will help pay medical bills for her husband, who was diagnosed with cancer last year. Many workers are forced to do low-wage work due to rising health care costs in the United States. Trump’s OBBB included large cuts to Medicaid and the Affordable Care Act, causing millions of people to lose their health insurance coverage.