Amazon Leverages New Tax Laws to Fuel AI Buildout

New tax laws around research and capital investment reduced Amazon’s U.S. corporate income taxes by more than half in 2025, even as the company’s profits rose, the Wall Street Journal reported Friday (Feb. 6).

Amazon’s current U.S. taxes declined from $9 billion to $1.2 billion, and its federal income taxes paid on a cash basis dropped from $7 billion to $2.8 billion, according to the report.

These declines happened during a year in which Amazon’s pretax U.S. profit rose by 44.5% to reach $89.5 billion, per the report.

The report attributed tax cuts to two changes made in a tax law signed by President Donald Trump in July. One change allowed companies to claim immediate deductions for some capital investments, rather than spreading them out over several years, while the other permits immediate deductions for new domestic research, instead of spreading them out, according to the report.

Much of the equipment used in data centers qualifies for the immediate deductions on capital investments, and Amazon spent $340 billion on operating costs and capital investments on data centers in the U.S. in 2025, per the report.

Amazon told the WSJ, per the report: “Congress made changes to the tax code to encourage greater investment in the American economy, its innovation and its workers — all areas where Amazon has long been a leader. Due to Amazon’s unprecedented U.S. investments, our tax bill this year reflects those changes.”

The company added that the accelerated adjustments provide a short-term benefit but don’t change the amount of tax it ultimately pays.

The White House says on a web page about the One Big Beautiful Bill that the legislation incentivizes made-in-America manufacturing by delivering “full 100% expensing for new factories, equipment and machinery to unleash domestic production.”

It was reported in September that AI-related infrastructure spending by Big Tech is expected to surpass $2.8 trillion through 2029 due to early investments by hyperscalers and rising demand for enterprise AI use.

Citigroup, which made these projections, also said it expects capital expenditures among hyperscalers, or data center operators, to reach $490 billion by the end of 2026.