At least 88 of the largest corporations in the U.S. paid no federal income tax in 2025, while major U.S. oil and gas companies paid very low federal tax rates according to new reports from the Institute on Taxation and Economic Policy (ITEP) and the FACT Coalition. Some lawmakers are also calling out corporate tax savings last year, amid cuts to the IRS and corporate layoffs.
ITEP Finds Widespread Corporate Tax Avoidance
Despite earning over $105 billion in collective pretax income, “tax-avoiding corporations” paid no federal income tax according to an April 14 report from ITEP. Instead of paying the statutory 21% corporate tax rate, these companies received a total of $4.7 billion in tax rebates, resulting in a total tax break of $26.7 billion for the year, per the report.
The companies identified by ITEP as paying a 0% federal tax rate represent a wide range of industries. Among them are major household names, including Tesla, which paid no federal income tax on almost $5.7 billion of U.S. income, per the report. ITEP also found that United Airlines avoided all federal income tax on almost $4.3 billion in U.S. income, while Yum! Brands — the parent company of KFC, Pizza Hut, and Taco Bell — paid no federal income tax on over $1 billion in pretax profits. Other well-known companies are also listed in the report, including 3M, Citigroup, CVS Health, Walt Disney, and Duke Energy.
Major Oil and Gas Companies Paid Very Low Tax Rates, Says FACT Coalition
ITEP is not the only group calling out corporate tax payments in 2025. A separate analysis by the FACT Coalition found that major U.S. oil and gas companies paid very low federal tax rates in 2025. Companies often paid significantly more in taxes to foreign governments than to the U.S., the FACT Coalition adds.
Overall, the three largest American oil and gas “supermajors” — Chevron, ConocoPhillips, and Exxon — paid an average effective tax rate of just 6% on their combined $23 billion in domestic profit for 2025, per the FACT Coalition.
However, Exxon paid five times more in taxes to the United Arab Emirates than it did to the U.S, according to the report. Meanwhile Chevron paid around three times as much in tax each to Kazakhstan, Nigeria, and Saudi Arabia as compared to what it paid in U.S. taxes, the FACT Coalition adds.
Why Were Corporate Tax Payments So Low?
ITEP attributes the increase in corporate tax avoidance in part to two major pieces of legislation: the 2017 Tax Cuts and Jobs Act (TCJA) and last year’s One Big Beautiful Bill Act (OBBB). The group identifies several key tax provisions that allowed profitable corporations to zero out their federal tax liability.
The most common was accelerated depreciation, which allowed companies “to immediately write off capital investments.” This tax break alone reduced the income taxes of the 88 companies by a collective $11.4 billion in 2025, said ITEP.
Other significant provisions include the research and experimentation (R&E) credit, which was used by at least 40 of the companies to reduce their tax bills per ITEP. In addition, some companies used a new tax break under the OBBB that allowed them to immediately write off research and development expenses, reducing their total 2025 income taxes by at least $4.4 billion, says ITEP.
The FACT Coalition also identifies revised guidance on the Corporate Alternative Minimum Tax (CAMT) as a contributor. CAMT is intended to “ensure that large, profitable American companies pay at least 15 percent in federal tax on the profits that they report to shareholders,” the FACT Coalition explains. However, interim guidance issued in February 2026, Notice 2026-7, changed how corporations calculate their adjusted financial statement income in certain circumstances.
“In addition to these regulatory tax breaks, Congress directly weakened CAMT for many large oil and gas companies by introducing a new carveout for ‘intangible drilling costs,'” the FACT Coalition added.
Lawmakers Question Corporate Tax Savings, IRS Audit Capabilities
The findings come as some lawmakers question corporations for conducting mass layoffs while simultaneously benefiting from tax cuts and posting record profits. The corporate tax savings also come after cuts to health care and other public benefits programs last year.
In a series of letters sent in March 2026, Senator Elizabeth Warren (D-MA) demanded explanations from the CEOs of Amazon, Meta, Microsoft, and UPS, among others, for laying off tens of thousands of workers. The letters contrast the stated job-creation goals of recent tax legislation with subsequent corporate actions.
For example, Warren’s letter to Amazon notes that the company announced layoffs of approximately 30,000 workers since the fall, but its federal income tax bill was cut from $9 billion in 2024 to $1.2 billion in 2025. Similarly, the letter to UPS questions the company’s plans to lay off 30,000 workers — on top of 48,000 layoffs last year — when its net income was over $5.5 billion in 2025.
“Corporations paid $65 billion less in taxes last year compared with 2024,” Warren said during an April 15 Senate Finance Committee hearing with IRS CEO Frank Bisignano. “Meta alone saved $3 billion. Amazon saved over $4 billion,” she added.
“And just for context, that $65 billion would have been enough money to extend the Obamacare tax credits three times over and still had money left over,” Warren stressed.
During the hearing, lawmakers pushed Bisignano on the tax gap — the difference between taxes legally owed and those that are timely paid. Senator Thom Tillis (R-NC) posited that the tax gap can be broken down into three buckets.
“I think what you’re going to find out is a third of the tax gap is really good tax policy from tax advisors,” Tillis explained. “It’s not recoverable because it’s legal.” However, there’s another bucket that “is probably the one that we can get back,” he explained. And there’s additional tax avoidance that “is not worth going after because it’s relatively low wage earners,” said Tillis.
After last year’s staffing reductions at the IRS, some lawmakers questioned the agency’s ability to audit large business and corporate tax returns and close the tax gap. “If what is happening is that less resources are being sent to large businesses, large corporations, international schemes, and super-high-end individuals for audit, then the results are kind of predictable,” said Senator Sheldon Whitehouse (D-RI). “They’ll get off scot-free.”
While IRS and Treasury leaders have touted the use of AI for enforcement, Whitehouse sought details on those efforts. “It might behoove the committee to have a kind of technical session on looking at how the IRS is implementing new AI and data systems in order to overcome what seems to be very dramatic reductions in workforce dedicated to audit,” Whitehouse said during the hearing.
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