Big Tech AI Tax Breaks: Warren's Five Questions for Amazon, Meta, Alphabet and Microsoft

Senator Elizabeth Warren and five fellow senators have asked Amazon, Meta, Alphabet and Microsoft to explain how far the 2025 tax law has cut their bills on artificial intelligence (AI) spending, and how much they spent lobbying for it. The letters on Big Tech AI tax breaks, made public on 28 September, give the four chief executives until 11 October to reply.

Underneath the politics sits a practical question: when a company builds the data centres that run AI, how much of the cost does the tax code absorb? Much of the answer depends on how quickly the law lets companies deduct what they spend.

Who signed and what they asked

The other signatories are Senators Richard Blumenthal, Jeff Merkley, Bernie Sanders, Elissa Slotkin and Tina Smith. Their targets are four of the largest builders of AI infrastructure, with sites such as Microsoft's Pecos campus, a 2-gigawatt development that comes with its own power plant.

The letter to Microsoft, addressed to chief executive Satya Nadella, sets out five questions. The senators want to know which deductions the company has claimed on its AI spending, including data centres, interest on debt and utility costs, and which provisions of the One Big Beautiful Bill Act it lobbied for, with the amounts spent. They also ask about lobbying on the administration's regulatory policies, about donations to politically active nonprofit groups working on tax and AI, and about donations to projects linked to President Trump since his inauguration in January 2025.

The numbers behind the request

Warren's office points to a 25% fall in corporate tax revenue this year, while the largest tech companies kept growing their sales and profits. The letter to Microsoft credits that figure, and an estimate of $96 billion in lost federal revenue, to reporting by Politico.

Microsoft's capital spending reached $115.9 billion in its 2026 financial year and its pre-tax income grew by $42.3 billion on the year before, yet its federal tax expense fell by more than $11 billion, according to figures the letter takes from the company's annual report. For Meta, Warren's office sets a rise of more than $15 billion in pre-tax income from 2024 to 2025 against a fall of almost $7 billion in federal tax expense.

How a tax break on equipment works

The 2025 law changed several corporate tax rules, and the letter to Microsoft also points to research expensing and the corporate alternative minimum tax. The provision closest to data centres concerns equipment: companies normally deduct its cost gradually, across the years they expect to use it, and the law made permanent a rule that lets them deduct the full cost in the first year. Warren's office says the Joint Committee on Taxation priced this rule, known as 100% bonus depreciation, at $362.7 billion over ten years.

The total deduction stays the same and arrives earlier, so the tax saved today is tax the company would otherwise have saved later. For a business whose spending on chips rises every year, those early deductions keep stacking up, which is how a tax bill can fall while profits climb.

The same infrastructure reaches well beyond Silicon Valley. Many banks and fintech companies rent cloud capacity from Amazon, Microsoft and Google, so the economics of these data centres also sit inside the services they sell.

Warren's case on CNBC

Warren made her argument on CNBC's Squawk Box on 29 September, saying American taxpayers should not keep subsidising data centres. She also called for a pause on new facilities until their builders can show the communities around them that they will not end up carrying the costs.

The other side of the argument

The White House has defended the provisions. Its spokesperson Kush Desai said in statements to the press that writing off equipment in full drives investment, jobs and wage growth. Microsoft declined to comment on the letters, and Amazon, Alphabet and Meta had not replied to press enquiries at the time of reporting.

Supporters and critics agree on the mechanism and disagree on the price. One side sees an incentive that keeps AI investment on American soil, and the other sees revenue that has to be found elsewhere in the budget.

What happens next

The companies have until 11 October to answer, and letters from senators carry no legal obligation to reply. The four companies' next annual reports will show the tax figures again, regardless of what they send.

The AI build-out is being financed twice: once by the companies that buy the chips, and once by a tax code that decides how quickly they can write them off.

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