Via robinhood.com
Palantir pays just 1% tax despite $370B valuation: report
The AI defense contractor paid zero federal income tax on $1.5 billion in US income while trading at valuations that make even the most optimistic crypto tokens look humble.
Palantir Technologies, the data analytics company that has become one of the most valuable firms in the world, managed to pay exactly nothing in federal income tax on $1.5 billion in US income for fiscal year 2025. At the statutory corporate rate of 21%, that would have been roughly $330 million owed to the IRS. Instead, the company kept every penny.
By early 2026, the company’s effective tax rate crept up to a whopping 1.37%.
How Palantir pulled it off
The secret sauce here is not particularly exotic. Palantir has leveraged provisions under Trump-era tax legislation that allow companies to immediately deduct research and development expenses. For a company that bills itself as an AI and data analytics powerhouse, R&D spending is essentially the entire business.
Palantir’s platforms serve US agencies including Immigration and Customs Enforcement, and the company maintains contracts with international defense partners including the Israeli military. The company is, in the most literal sense, a government contractor that does not pay the government.
The Freedom Tech connection
On July 24, 2026, Palantir was announced as a founding partner in the US State Department’s Freedom Tech Excellence Program. The initiative focuses on online surveillance, AI governance, and, notably, the integration of Bitcoin and blockchain technologies to help circumvent censorship in authoritarian regimes.
The program’s other founding partners include the Bitcoin Policy Institute and Anduril Industries, the defense tech company founded by Palmer Luckey.
Palantir does not hold any specific tokens or operate blockchain infrastructure.
Valuation concerns and market implications
Palantir’s stock has been one of the most polarizing trades in the market. The company regularly trades at valuations exceeding 150x forward earnings. The company’s market capitalization approached $370 billion at the end of 2025, with shares trading around $155.
Washington has spent years debating how to tax crypto gains while simultaneously allowing AI companies to write off enough R&D expenses to zero out billion-dollar tax bills.