Meta informs IRS that data centers are experimental and may fail

Meta is telling the IRS that its multi-billion-dollar data centers, the backbone of its AI ambitions, are essentially science experiments that might not work out. The classification matters enormously, because under new US tax law, experimental expenditures can be written off immediately rather than amortized over years. The result: Meta’s federal tax expense plummeted from $9.6 billion in 2024 to $2.8 billion in 2025. That’s a 71% drop in a single year, even as the company poured roughly $72 billion into capital expenditures, the vast majority of which went toward data center construction and AI infrastructure. The tax law that made it possible The mechanism behind this maneuver is the One Big Beautiful Bill Act, signed into law in 2025. Among its many provisions, the OBBBA reinstated immediate expensing for domestic research and experimental expenditures under a new section of the tax code, IRC Section 174A. Before this legislation, companies had to amortize their R&E spending over five years for domestic costs and 15 years for foreign ones, a change introduced in 2022 that the tech industry had lobbied aggressively against. The OBBBA effectively reversed that by letting comp...