Sen. Warren questions big tech on AI tax breaks amid scrutiny

Senator Elizabeth Warren wants to know where big tech’s tax dollars went. On September 28, she and fellow Senate Democrats fired off letters to the CEOs of Meta, Alphabet, Amazon, and Microsoft, demanding a detailed accounting of the tax deductions and subsidies these companies have claimed on their massive AI and data center investments.

The trigger: corporate tax payments from these four firms have collectively fallen 25% year-over-year, even as their revenues kept climbing.

The numbers behind the inquiry

The individual figures are striking. Microsoft’s federal income tax expense dropped by more than $11B from fiscal year 2025 to fiscal year 2026. Amazon’s federal tax payments fell nearly $8B from FY2024 to FY2025. Alphabet’s combined federal and state tax expenses shrank by over $7B.

All three companies, meanwhile, have been spending aggressively on AI infrastructure. Meta alone reported $72B in capital expenditures last year, with the bulk going toward data centers and AI-related projects.

Warren’s letters trace the declining tax bills directly to the 2025 Republican-led legislation known as the “one big beautiful bill” act, or OBBBA. That law included provisions allowing companies to claim generous deductions on capital investments, including permanent 100% bonus depreciation and retroactive research and development expensing. The Joint Committee on Taxation has estimated that $67 billion in retroactive tax breaks will be available to companies in 2026 alone.

Warren’s office has mapped out how tax savings for giants like Alphabet (approximately $17.9 billion), Amazon (about $15.7 billion), and Microsoft (around $12.5 billion) could alternatively be utilized to fund essential programs such as SNAP or Medicaid.

Warren’s broader campaign against AI infrastructure subsidies

This isn’t Warren’s first move on the issue. Back on May 27, she published an op-ed proposing an excise tax on energy consumption by AI data centers. Reports have surfaced indicating that consumer electricity bills are rising, linked to the increasing demand from data centers.

The top three US data center operators by active IT capacity are Amazon, Meta, and Microsoft, according to ABI Research. Alphabet, despite its enormous cloud business, ranks tenth on that list.

What the OBBBA actually enabled

Meta’s $72B capital expenditure figure illustrates the scale of what’s happening. When spending at that scale generates proportionally massive tax deductions, the impact on federal revenue is hard to ignore.

What this means for big tech and investors

If the letters produce detailed disclosures showing exactly how much each company saved through OBBBA-related deductions, those numbers will become ammunition for future legislative efforts. An $11B swing in tax expense, as Microsoft experienced, flows directly to the bottom line.

If an excise tax on data center power consumption gains traction, it would increase the operating costs of AI infrastructure across the board. Companies with the largest data center footprints, precisely the ones Warren is targeting, would bear the heaviest burden.