‘Big, Beautiful’ Tax Benefits: Amazon and other tech giants are reaping the benefits of the new law right now

‘Big, Beautiful’ Tax Benefits: Amazon and other tech giants are reaping the benefits of the new law right now

By Todd Bishop | Published: 2025-10-31 17:01:00 | Source: GeekWire

Amazon’s cash tax bill fell sharply this year under a new US tax law that allows companies to immediately deduct the cost of equipment and research – a policy designed to encourage spending on technology development and other investments.

The decline was detailed in the company’s third quarter 10-Q filingwas released Friday morning after its blockbuster earnings report. Amazon shares rose more than 10% in early trading after beating expectations and reassuring investors about long-term demand for artificial intelligence.

In the filing, Amazon cites the “Big Beautiful Bill Act of 2025” as a key factor in the tax deduction. This situation illustrates how tax changes supported by President Trump and the Republican-led Congress are rewarding American investment and reshaping corporate finances.

But it’s not as simple as a basic tax break: While the law accelerates short-term reductions in domestic investment, it also changes the tax treatment of foreign earnings – boosting long-term tax liabilities overall.

According to its quarterly filing, Amazon paid $1.1 billion in cash for income taxes in the third quarter, down 45% from the $2 billion it paid in the same period last year — even as quarterly profits rose 38% to $21.2 billion. In the first nine months of 2025, cash tax payments fell to $6.8 billion, compared to $8.2 billion in 2024.

The new law changes two key rules that affect companies making large capital investments.

• First, it brought back the 100% “depreciation bonus,” allowing companies to deduct the full cost of new equipment — such as AWS servers, artificial intelligence, or warehouse robots — in the year it was purchased rather than spreading the deduction over several years.
• Second, it restored immediate spending on domestic R&D costs, reversing the recent rule that such spending was amortized over several years.

Increased capital spending and job cuts

For a company like Amazon, these changes result in a significant and immediate reduction in taxable income. The tech giant spent $35.1 billion on property and equipment in the third quarter, up 55% from a year earlier, driven by huge investments in artificial intelligence infrastructure.

Supporters of the US tax changes said they would stimulate investment and job creation in the United States, but Amazon’s situation shows that the reality is more complex. The company is reaping the benefits of the new tax incentives, with about 14,000 jobs being eliminated at the company.

Speaking about Amazon’s profits, CEO Andy Jassy attributed the layoffs not to cost-cutting but to efforts to streamline operations and reduce bureaucracy after years of growth. Amazon took a pre-tax charge of $1.8 billion in the quarter for severance pay and other costs related to layoffs.

Amazon isn’t alone in spending big on AI infrastructure or taking advantage of tax changes.

Although they didn’t go into as much detail as Amazon did, both Microsoft and Google referenced the 2025 US tax law in their recent quarterly reports, noting the return of direct expenditures on research and development and accelerated consumption. The two companies are realizing similar tax benefits in the near term as they expand their investments in artificial intelligence and cloud infrastructure.

The long-term tax saving remains intact

For Amazon, the changes to US tax law represent a new chapter in a long-running national debate. The company, which has faced criticism in recent years for paying little or no federal income tax despite strong profits, has long maintained that it pays what it owes under U.S. law.

However, immediate reduction is only part of the picture.

While Amazon’s cash payments declined, tax expenses reported on its income statement nearly doubled — a figure based on accounting rules rather than cash paid. The company’s income tax provision for the first nine months of 2025 was $14.1 billion, up from $6.9 billion in the same period last year.

The increase was also driven by the new tax law, which reduced other benefits, such as the deduction for profits earned abroad, Amazon’s filing says.

This $7.3 billion gap between its accounting allocation ($14.1 billion) and the cash tax bill ($6.8 billion) shows how the new law changes the timing of tax payments rather than eliminating them. In effect, deductions reduce a company’s cash outlay for taxes in the short term but will eventually be paid back in future years as those assets are depreciated on the company’s books.

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