Meta’s quarterly report showed an effective tax rate of 2% for the nine months ended Sept. 30, 2026, far below the statutory federal rate of 21%. The company reported income before taxes of $53.5 billion and a tax provision of just $1.03 billion. The bulk of the reduction came from Treasury Notice 2026-7, issued on Feb. 18, which provided relief from the corporate alternative minimum tax for previously capitalized U.S. research and development costs. Without that benefit, Meta’s tax provision would have been about $9.06 billion, roughly 17% of pretax income, according to a Fortune calculation.
But a separate tax break has drawn scrutiny. In an Oct. 13 letter to Zuckerberg, Sens. Ron Wyden, Sheldon Whitehouse, Elizabeth Warren, Catherine Cortez Masto, Maggie Hassan, Ben Ray Luján, and Peter Welch said public records show Meta claimed to the IRS that its AI data centers are experimental “pilot models” qualifying for the research credit. According to the letter, Meta used that credit to cut its federal income tax liability by $6.6 billion from 2023 through 2025: $700 million in 2023, $2 billion in 2024, and nearly $4 billion in 2025.
“Subsidizing your A.I. data center build is not close to meeting this standard,” the senators wrote, though they acknowledged the federal research credit can support innovation. The letter asks Meta to detail how much of the credit each year went to microchips, computing equipment and other data center materials.
Senator Warren told Fortune, “AI companies are delivering a one-two punch to families, forcing Americans to subsidize their data centers with your tax dollars and higher utility bills. We need to crack down on these Big Tech companies and make sure they pay their fair share.” a Meta spokesperson defended the company’s use of the credit, saying “Meta is one of the largest investors in research and development in the United States.” The spokesperson noted a $200 billion R&D investment over five years and argued that “AI-optimized data centers are inherently new and require extensive testing and experimentation that cannot be simulated in order to get the design and build right. This is precisely the kind of domestic investment Congress encouraged when it established these tax incentives decades ago.”
Meta’s filings also show $20.82 billion in gross unrecognized tax benefits as of Sept. 30, up from $16.45 billion at the end of 2025, representing savings claimed but not yet finalized. The company said those benefits were primarily accrued for uncertainties related to its research tax credits and transfer pricing with foreign subsidiaries.