US corporate tax revenue falls as companies write off AI spending

In short: U.S. corporate income tax revenue fell in fiscal 2026 as many companies used a tax rule that lets them deduct big investments right away, including AI-related spending.

What's going on

U.S. corporate income tax revenue was about $381 billion in fiscal 2026. That was roughly $70 billion lower than the year before, a drop of about 15%, according to reporting by The New York Times. It followed another decline, leaving receipts more than a quarter below fiscal 2024 levels.

One major reason is a 2025 tax law signed by President Trump. The law allows many companies to immediately deduct the cost of certain investments, instead of spreading those deductions out over several years. You can think of it like paying off a large purchase on day one, at least on paper, rather than a little bit each month.

The rule is not limited to artificial intelligence, but big technology companies are using it heavily for AI infrastructure. That includes data centers (large buildings full of computers), computer chips, servers, and research and development. Because these costs can be deducted right away, a company can report strong profits but still owe less in taxes for that year.

Microsoft is one example cited in the report. The company said its current tax expense fell from $14.1 billion to $2.5 billion even as its income increased. The Times noted this may reflect timing, meaning taxes could be higher later when fewer deductions remain.

What to watch

The $70 billion figure describes the overall year over year drop in corporate tax revenue, not a measured total of AI-only tax breaks. An estimate for the first 11 months of fiscal 2026 put the decline at $96 billion versus the same period a year earlier. Watch for how long heavy investment continues, and whether lawmakers revisit these write-off rules as federal revenue changes.

Source: NYTimes