- Microsoft’s annual report suggests data-center spending could produce tax savings of up to twelve billion dollars.
- One analysis estimates five tech companies received seventy billion dollars in tax breaks in twenty twenty-five, including twenty-seven billion dollars from accelerated depreciation.
- Ohio reported nearly one point five seven billion dollars in foregone state sales taxes from data-center exemptions in twenty twenty-five, separate from federal depreciation deductions.
Major technology companies are claiming equipment costs sooner under 100% bonus depreciation, lowering current and near-term tax bills as they expand computing facilities. Some estimates put the savings at billions of dollars. The benefit chiefly changes when companies claim deductions.
Microsoft’s annual report figures put potential tax savings tied to data-center spending at as much as $12 billion. The estimate may include other tax benefits. The figure carries a caveat.
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The deduction lets companies write off equipment costs immediately instead of spreading them across several years. That lowers taxable income in the year companies make the investment. Hardware drives much of the project cost.
Chips, servers, racks and other equipment make data centers especially exposed to the rule. The deduction shifts tax benefits forward rather than necessarily eliminating costs companies otherwise would deduct later.
The two tax estimates count different benefits
One tax-policy analysis put combined tax breaks for Amazon, Alphabet, Meta, Microsoft and Oracle at $70 billion in 2025. It attributed $27 billion of that amount to accelerated depreciation.
A separate analysis estimated that Microsoft, Meta, Alphabet and Amazon avoided $68 billion in 2025 taxes. That figure includes depreciation and three other tax breaks in the 2025 tax law.
The totals overlap in companies, but their scopes differ. They are not directly additive. One estimate covers five companies’ tax breaks and identifies the depreciation portion; the other covers four companies and includes several provisions.
The deduction moves tax savings forward in time
Congress enacted the federal rule in 2017. The One Big Beautiful Bill Act expanded it in 2025, restoring the full deduction and making it permanent.
Companies can claim equipment costs earlier than they otherwise would. When investment surges, that can depress annual corporate tax receipts, even though the deductions would have arrived in later years. The tax effect is concentrated in timing.
House Democrats seek a carveout for data centers
House Democrats introduced the Reverse Big Ugly Tax Breaks for Data Centers Act, which would bar data centers from the accelerated deduction and Opportunity Zone benefits.
Rep. Chris Pappas, Rep. Kristen McDonald Rivet and Rep. Don Davis were tied to the effort, along with 28 other members. The proposal targets federal incentives for data-center projects.
Ohio’s sales-tax exemptions add a separate cost
Federal depreciation is only one part of the tax incentives associated with data centers. Ohio’s sales-tax exemption for the industry was reported at more than $1.5 billion in 2025, and the state paused new applications after public backlash.
A separate accounting put Ohio’s forgone state sales-tax revenue from data-center exemptions at nearly $1.57 billion in 2025. Local exemptions added $446.3 million. Those are state and local sales-tax figures, separate from federal depreciation deductions.
This article is for informational purposes only and does not constitute tax advice. Consult a qualified tax professional or CPA about your specific situation.
