Meta The documents submitted this week mainly focus on the newly established class of shares without voting rights. This arrangement will allow Mark Zuckerberg to raise cash, including funds sufficient to cover a potential California wealth tax, while not relinquishing control of the company. Meta It is stated that the company needs these new shares to support its artificial intelligence ambitions: according to its prospectus, management's forecasts "show that the company will need to raise tens of billions of dollars over several years, starting as early as the fall of 2026."
Although this message relates to the possible tax bills that an individual may face, Meta's quarterly report shows how low the company's own tax bills could be.
Meta stated in the report: 'For the nine months ending September 30, 2026, our actual tax rate was 2%,' whereas the statutory tax rate stipulated by federal law is 21%. The company disclosed that its pre-tax profit for these nine months was 53.5 billion US dollars, with an income tax provision of 1.03 billion US dollars. In contrast, if changes in its tax environment are not taken into account, Meta indicated that 'we expect the tax rate for the fourth quarter of 2026 to be between 15% and 17%.'
Most of these changes came from a single event: on February 18th, the U.S. Treasury Department issued Notice 2026-7, which provided deductions for corporate alternative minimum taxes related to previously capitalized research and development costs in the United States. Meta recognized tax benefits of $803 million in the first quarter, which partially offset the $159.3 million in expenses recognized in the third quarter of 2025; the latter was recognized after the Large and Beautiful Act became law. In that quarter, Meta had an actual tax rate as high as 87%.
This income has a significant impact on this year's tax rate. Meta disclosed that the tax rate in the first quarter was negative 23%; without this income from the Ministry of Finance, the tax rate would have been 37 percentage points higher, at approximately 14%. Its first-quarter report stated that the decrease in the tax rate was "mainly due to the Ministry of Finance's Notice No. 2026-7."
Based on the first nine months, if this income were not present, the income tax provision for Meta would have been approximately $9.06 billion, which is about 17% of the pre-tax profit. This calculation is based on Fortune's documentation. In the third quarter of Meta, the tax rate was 24%, and this income did not affect that quarter; the company stated that if the $9.89 billion in expenses were excluded, the tax rate would have been 17%.
The upcoming deadline in Congress
Meta is now facing another issue from some members of Congress, which relates to another tax incentive. The company is under scrutiny for allegedly classifying its data centers as experimental projects, which is said to have allowed Meta to obtain federal research and development tax credits. Senators Ron Wyden (Democrat from Oregon), Sheldon Whitehouse (Democrat from Rhode Island), Elizabeth Warren (Democrat from Massachusetts), Katherine Cortez Masto (Democrat from Nevada), Maggie Hassan (Democrat from New Hampshire), Ben Ray Lujan (Democrat from New Mexico), and Peter Welch (Democrat from Vermont) wrote to Zuckerberg on October 13th, requesting a response regarding the federal tax filings for Meta before Halloween. The letter cited reports from The New York Times.
Senators wrote that, according to public records, Meta stated in its federal tax returns to the Internal Revenue Service (IRS) that its AI data center was considered an experimental “pilot model” eligible for deductions. The letter mentioned that Meta indicated in federal regulatory documents that between 2023 and 2025, the company utilized research and development deductions to reduce its federal income tax liability by $6.6 billion, with $700 million in 2023, $2 billion in 2024, and nearly $4 billion in 2025.
They wrote: "Federal research and development credits can be a useful and necessary tool to support our country's innovative economy and cutting-edge research. Subsidizing the construction of your AI data centers falls far short of this standard." The letter requests that Meta explain how much of the credits they receive each year is used for microchips, computing equipment, and other data center materials.
Funds set aside as a backup for rainy days
The documents from Meta show that there is still controversy over the extent of tax savings achieved. As of September 30th, the total amount of unconfirmed tax benefits amounted to $20.82 billion, which represents the savings that the company has claimed but have not yet been finally recognized. This figure is higher than the $16.45 billion projected by the end of 2025. If these benefits are realized in the future, the company's income tax provision will be reduced by $14.58 billion. The company stated that it expects to continue to make provisions for these amounts regarding certain recurring tax positions and believes that such provisions are adequate. The annual report for Meta indicates that these benefits "are mainly in relation to our research and development tax credits as well as uncertainties associated with transfer pricing with overseas subsidiaries."
Warren said to Fortune: “AI companies are dealing a double blow to families, forcing Americans to subsidize their data centers through taxes and higher utility bills. We need to take a tough stance against these large tech companies to ensure they pay their fair share.”
Meta defends its use of this deduction.
A spokesperson for Meta told Fortune: "Meta is one of the largest R&D investors in the United States. Over the past five years, Meta has invested $200 billion in R&D—$57 billion last year alone—driving cutting-edge research, building new technologies, and supporting American jobs."
Unlike traditional data centers, the data centers optimized by AI are essentially new and require a large amount of testing and experimentation, which cannot be accomplished through simulation to ensure that the design and construction are correct. This is precisely the type of domestic investment that Congress encouraged when it established these tax incentives decades ago.
