Meta reported an effective tax rate of just 2% for the nine months ending September 30, 2026, despite recording $53.5 billion in income before taxes, according to its latest quarterly filing.
The company reported a tax provision of $1.03 billion for the period, significantly below the 21% statutory federal corporate tax rate.
Meta’s filings also show that its tax rate could rise in the final quarter of the year. The company expects an effective tax rate of between 15% and 17% for the fourth quarter of 2026, assuming no further changes to its tax circumstances.
Treasury Relief Provides Meta With an $8 Billion Tax Benefit
A major factor behind Meta’s low effective tax rate was an $8.03 billion tax benefit recognised during the first quarter of 2026.
The benefit followed a notice issued by the US Treasury Department on February 18, designated Notice 2026-7, which provided relief from the corporate alternative minimum tax relating to previously capitalised domestic research and development expenses.
Meta reported a negative effective tax rate of 23% for the first quarter. Without the Treasury benefit, the rate would have been approximately 14%, according to the company’s filing.
The tax benefit also affected the company’s overall rate for the first nine months of the year. Based on a calculation by Fortune using Meta’s filings, the company’s tax provision would have been approximately $9.06 billion without the benefit, equivalent to roughly 17% of its pretax income.
The relief partly offset a $15.93 billion tax charge Meta recognised in the third quarter of 2025 following the enactment of the One Big Beautiful Bill Act. The company recorded an effective tax rate of 87% during that quarter.
Meta’s New Share Structure Linked to Plans to Raise Hundreds of Billions
The tax disclosures come as Meta seeks to introduce a new class of non-voting shares that would allow chief executive Mark Zuckerberg to raise funds without surrendering control of the company.
The proposed shares have drawn attention because they could provide Zuckerberg with cash, including funds that could potentially be used to cover a California wealth tax.
Meta has said the new share structure is also connected to its plans to finance its artificial intelligence ambitions.
According to the company’s information statement, management forecasts indicated that Meta could need to raise hundreds of billions of dollars over several years, beginning as early as autumn 2026.
Senators Question Meta’s Use of Research Tax Credits for AI Data Centres
Meta is facing separate scrutiny from a group of Democratic senators over its reported use of federal research and development tax credits to support the construction of AI data centres.
On October 13, seven senators wrote to Zuckerberg requesting information about the company’s federal tax filings and asking for a response by Halloween.
The lawmakers were Ron Wyden of Oregon, Sheldon Whitehouse of Rhode Island, Elizabeth Warren of Massachusetts, Catherine Cortez Masto of Nevada, Maggie Hassan of New Hampshire, Ben Ray Luján of New Mexico and Peter Welch of Vermont.
Their letter cited a New York Times report alleging that Meta classified its AI data centres as experimental pilot models to qualify for federal research credits.
According to the senators, Meta’s regulatory filings indicate that it used research tax credits to reduce its federal income tax liability by $6.6 billion between 2023 and 2025.
The reported reductions were $700 million in 2023, $2 billion in 2024 and nearly $4 billion in 2025.
Lawmakers Demand Breakdown of Data Centre Tax Benefits
The senators acknowledged that federal research credits can support innovation and advanced scientific work but questioned whether the incentives should cover the construction of AI data centres.
“The federal research credit can be a useful and necessary tool to support our nation’s innovation economy and cutting-edge research,” the lawmakers wrote. “Subsidizing your A.I. data center build is not close to meeting this standard.”
They asked Meta to disclose how much of its research credit in each year was attributable to microchips, computing equipment and other materials used in its data centres.
The inquiry focuses on whether the company’s reported classification of its AI infrastructure as experimental research meets the requirements for the tax incentives.
Meta Reports More Than $20 Billion in Unrecognised Tax Benefits
Meta’s latest filings also show an increase in tax benefits it has claimed but which have not yet been recognised as final.
The company’s gross unrecognised tax benefits reached $20.82 billion as of September 30, 2026, compared with $16.45 billion at the end of 2025.
If the benefits were realised in a future reporting period, Meta said its tax provision could be reduced by $14.58 billion.
The company expects to continue accruing amounts associated with certain recurring tax positions and maintains that its existing provisions are adequate.
Meta’s annual report for 2025 said the uncertainties behind these tax benefits primarily involved research tax credits and transfer pricing arrangements with its foreign subsidiaries.
Elizabeth Warren Criticises AI Companies Over Tax and Utility Costs
Senator Elizabeth Warren criticised the tax arrangements, arguing that AI companies were benefiting from public support while imposing additional costs on households.
“AI companies are delivering a one-two punch to families, forcing Americans to subsidize their data centers with your tax dollars and higher utility bills,” Warren told Fortune.
She called for stronger action against major technology companies to ensure they paid what she described as their fair share of taxes.
Meta Defends Its Research and Development Investments
Meta defended its use of federal research and development tax credits, citing the scale of its spending on technology and innovation in the United States.
A company spokesperson told Fortune that Meta had invested $200 billion in research and development over the previous five years, including $57 billion in the most recent year.
The spokesperson said the investment had advanced research, developed new technology and supported American jobs.
The company also argued that AI-focused data centres require extensive testing and experimentation because their designs and construction differ from those of traditional data centres.
“Unlike traditional data centers, AI-optimized data centers are inherently new and require extensive testing and experimentation that cannot be simulated in order to get the design and build right,” the spokesperson said.
Meta maintained that these activities fall within the type of domestic investment Congress intended to encourage when it established the tax incentives.
