Fifteen Companies Each Avoided More than $1 Billion in Taxes from a Single Trump Tax Cut

One of the tax cuts included in former President Trump’s signature 2017 tax law was the deduction for Foreign-Derived Intangible Income (FDII). The FDII deduction provides a lower effective tax rate on income earned from intangible assets, such as patents, trademarks, and other forms of intellectual property. To contain the costs of the original tax law, the FDII rate was set to rise in 2026 but still not to the full 21 percent corporate tax rate. But lawmakers should consider abandoning the FDII break entirely. Corporate financial data analyzed by ITEP shows that many large, multinational corporations have benefited substantially from the FDII break.

Since the law went into effect in 2018, 15 corporations have separately reported more than $1 billion in tax benefits. Alphabet (the parent company of Google) reported the most, at more than $11 billion in tax breaks from 2018 to 2023. Other beneficiaries include large tech firms such as Meta, Microsoft, Intel, and Qualcomm.

The tech industry is not alone in benefiting from this tax break. Amazon, Nike, McDonald’s, and several pharmaceutical companies also reported more than $1 billion in tax breaks over this period. And because companies are not required to disclose this information, there could be many more.

FDII Tax Benefits, 2018-2021 (in millions)

Source: Institute on Taxation and Economic Policy, October 2024

FDII is problematic for many reasons. The tax break disproportionately benefits large corporations with significant intellectual property portfolios while doing little for smaller firms that lack similar assets. It also creates an incentive to shift investments overseas to exploit the lower tax rate. And the benefits of FDII primarily flow to industries that are heavily reliant on intangible assets, like tech and pharmaceuticals, thereby creating a tax code that treats different sectors of the economy much differently.

Most corporations that have made public disclosures about FDII can be found in the table below. These data do not include every company that has claimed a tax deduction for FDII on their actual tax returns. Companies are not strictly required to disclose this information on their public financial statements, so only those who have elected to do so in at least one of the years between 2018 and 2023 are included. Further, some companies disclose large benefits in some years but do not report anything in other years. This indicates that the benefits to large multinationals are larger than what is reported in this brief.

Download data for FDII Tax Benefits, 2018-2023

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Methodology note: The data presented here are taken directly from the income tax note of each company’s 10-K annual financial report. The Securities and Exchange Commission requires publicly traded companies to disclose factors that have a significant effect on their effective tax rates. Some large companies chose to present the effects of the FDII tax break in combination with the (partially or completely offsetting) effect of the GILTI tax provision; these companies are excluded from our results, which means the table likely substantially understates the real budgetary costs of FDII.

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