Amazon Secures 87% Tax Cut Under New Legislation Amidst Major Workforce Reductions
Seattle, Sunday, 8 February 2026.
Amazon’s federal tax liability plummeted 87% to $1.2 billion in 2025 under the ‘One Big Beautiful Bill Act,’ despite a 44.5% surge in profits. This fiscal development coincides with the elimination of approximately 30,000 jobs, raising critical analytical questions regarding the correlation between corporate tax incentives and actual labor market stability.
A Divergence in Fortunes: Profits Rise, Liabilities Fall
The financial disclosures released for the fiscal year 2025 reveal a stark contrast between Amazon’s profitability and its contribution to the federal treasury. While the company’s pretax U.S. profits surged by 44.5% to reach $89.5 billion, its federal tax bill moved inversely, falling from $9 billion in the previous year to just $1.2 billion [1][3]. This represents a decrease of approximately -86.667 percent. In terms of actual cash payments made to the Treasury Department—which can differ from the tax expense recorded on financial statements due to accounting rules—Amazon paid $2.8 billion in 2025, a significant decline from the more than $7 billion paid in each of the prior two years [1][3]. Politico reports the specific cash payment figure as $2.75 billion, down from $7.63 billion in 2024 [2].
The Mechanics of the Windfall
The primary driver behind this reduced liability is the “One Big Beautiful Bill Act” (OBBBA), legislation signed into law by President Trump in July 2025 [3]. This act introduced generous provisions allowing corporations to claim immediate deductions for domestic research and capital investments, rather than amortizing these costs over several years [2][3]. Amazon, having invested heavily in infrastructure to support its artificial intelligence ambitions, was uniquely positioned to capitalize on these changes. The company reported investing $340 billion in the U.S. economy in 2025 alone, with significant expenditures directed toward data centers and equipment that qualify for full expensing under the new law [2][3][4]. Consequently, Amazon argues that its lower tax bill simply reflects these congressional incentives designed to encourage domestic investment [2][3].
Corporate Defense and Accounting Nuances
Amazon maintains that the headline tax figures do not fully capture its fiscal reality. The company stated on Friday, February 6, 2026, that under financial accounting rules, its effective tax rate for 2025 was 19.6% [2]. However, this figure excludes the impact of the accelerated depreciation write-offs, which Amazon characterizes as “timing shifts” that provide a short-term benefit by allowing more deductions now in exchange for fewer in the future [2][3]. Furthermore, Amazon highlights its broader economic contributions, noting a total federal income tax expense of $12.4 billion and the collection of $33.4 billion in sales taxes on behalf of states and localities [4].
Workforce Reductions and Automation
While the tax code has rewarded Amazon’s capital investments, the company’s labor force has faced significant contraction. Coinciding with its fiscal gains, Amazon has confirmed the elimination of 16,000 corporate jobs as part of a broader reduction totaling approximately 30,000 workers [1]. This restructuring occurs as the company pivots toward replacing human labor with robotics and artificial intelligence models [1]. This juxtaposition has drawn sharp criticism from progressive analysts, who argue that the OBBBA prioritizes capital over labor. One think tank noted that Congress effectively chose to “double down on a tax code already favoring dominant firms” while the company simultaneously reduces its workforce [1].
Sector-Wide Implications
Amazon is not the sole beneficiary of the 2025 tax regime. Data released by the Institute on Taxation and Economic Policy (ITEP) on February 4, 2026, indicates that Amazon, Alphabet, Meta, and Tesla collectively received $51 billion in federal tax breaks for the year [1]. Together, these four corporations reported $315 billion in U.S. profits but paid only 4.9% of that amount in federal corporate income taxes [1]. The disparity is perhaps most visible at Tesla, which reported $5.7 billion in U.S. income yet paid exactly zero in federal income tax [1][5]. Meta also saw its effective federal income tax rate drop to just over 3.5%, its lowest since going public [5][6]. These figures suggest that the OBBBA has successfully lowered the effective tax burden for major technology firms well below the statutory corporate rate of 21% [1][6].