This was first published by Bloomberg.
The tech giant Meta made news this week with its announcement that the company’s quarterly income was reduced by a whopping $16 billion due to income taxes. A number of media outlets reported this news in a way that at least implied the recently-enacted Trump tax cuts are responsible for Meta’s income tax hit. But in fact, Meta’s earnings setback is entirely attributable to an important tax reform championed by the Biden administration in 2022.
This summer’s big tax bill gave corporate America virtually everything it wanted: the so-called “One Big Beautiful Bill Act” (OBBBA) permanently extends bonus depreciation, allows immediate expensing of research and development spending, loosens limits on interest deductions, creates lavish new subsidies for fossil fuel companies, and preserves the 21 percent statutory tax rate. So it’s not surprising that Meta sees nothing but flowers in its tax forecast as a result of the new law, saying it expects “a significant reduction in our U.S. federal cash tax payments for the remainder of 2025 and future years due to the implementation of the One Big Beautiful Bill Act.”
But there’s a fly in Mark Zuckerberg’s ointment: the Biden-era Corporate Alternative Minimum Tax (CAMT) is set to give a $16 billion haircut to Meta’s OBBBA tax-cut haul. Enacted three years ago in response to revelations that hugely profitable companies have been able to leverage a variety of tax breaks to avoid paying even a dime of federal income tax, the CAMT is designed to act as a backstop to the regular income tax. Rather than directly repealing the dizzying array of specific tax breaks used by tax avoiders, the CAMT puts a cap on the aggregate amount of tax breaks these companies can claim, ensuring that tax breaks can’t reduce the effective tax rate of very large companies below 15 percent of their adjusted financial statement income.
The CAMT indirectly limits the tax benefits companies can receive from some of the tax breaks that were greatly expanded by the OBBBA, most notably R&D expensing and interest deductions. This means that for companies that (like Meta) routinely generate more tax breaks than they can use in a year, the CAMT can create a real possibility that they won’t be able to cash in on these unused tax breaks in future years. That appears to be what Meta’s tax team is acknowledging in this week’s earnings report: Meta’s earnings release confirms that Meta’s $16 billion tax hit “reflect[s] the impact of the U.S. Corporate Alternative Minimum Tax.”
So the CAMT appears, in this case, to be making Trump’s latest budget-busting tax cut at least slightly less costly. Small wonder that the Trump administration has shown active hostility toward the CAMT: as the Tax Law Center has documented, Trump’s Treasury Department has issued multiple rounds of regulations weakening the reach of the tax since the beginning of 2025, each of which appears to be designed to reduce the effectiveness of Biden’s corporate tax backstop. Republicans in Congress are doing their part to weaken the minimum tax as well: OBBBA specifically exempts certain categories of oil and gas company income from the CAMT, ensuring that one of the lowest-taxed industries in America will remain so going forward.
In the three months since the passage of Trump’s latest tax cut, the outlook for the health of our corporate income tax has been grim. Dozens of companies have forecast tax savings in the billions from the new law, and the Congressional Budget Office has concluded that the new tax law is mainly responsible for a 15 percent drop in corporate tax collections over the past year. But Meta’s recent earnings report is an important reminder that, despite the Trump administration’s efforts, important reforms put in place by the Biden administration are preventing the worst abuses of our corporate tax laws.
