Amazon’s money tax invoice has dropped sharply this yr below a brand new U.S. tax legislation that lets corporations instantly deduct the price of tools and analysis — a coverage designed to encourage spending on know-how improvement and different investments.
The lower is detailed within the firm’s third-quarter 10-Q filing, launched Friday morning following its blockbuster earnings report. Amazon’s shares rose greater than 10% in early buying and selling after beating expectations and reassuring traders about long-term AI demand.
Within the submitting, Amazon cites the “One Large Lovely Invoice Act of 2025” as a key issue within the tax deduction. The state of affairs illustrates how tax modifications championed by President Trump and the Republican-led Congress are rewarding U.S. funding and reshaping company funds.
Nevertheless it’s not so simple as a primary tax break: whereas the legislation accelerates short-term deductions for home funding, it additionally modifications the tax therapy on international earnings — boosting long-term tax liabilities total.
In response to its quarterly submitting, Amazon paid $1.1 billion in money for revenue taxes within the third quarter, a forty five% lower from the $2 billion it paid in the identical interval final yr — at the same time as quarterly earnings rose 38% to $21.2 billion. For the primary 9 months of 2025, money tax funds fell to $6.8 billion, down from $8.2 billion in 2024.
The brand new legislation modified two key guidelines that impression corporations making massive capital investments.
- First, it reinstated 100% “bonus depreciation,” permitting corporations to deduct the complete value of latest tools — comparable to servers for AWS and AI or warehouse robotics — within the yr it’s bought relatively than spreading the deduction over a few years.
- Second, it restored the rapid expensing of home R&D prices, reversing a current rule that required this spending to be amortized over a number of years.
Boosting capital spending and chopping jobs
For an organization like Amazon, these modifications create a big and rapid discount in taxable revenue. The tech big spent $35.1 billion on property and tools within the third quarter, up 55% from a yr earlier, pushed by huge investments in AI infrastructure.
Backers of the U.S. tax modifications mentioned they might spur funding and job creation in america, however Amazon’s state of affairs reveals that the fact is extra sophisticated. The corporate is reaping the advantages of the brand new tax incentives whereas eliminating about 14,000 corporate jobs.
Talking on Amazon’s earnings name, CEO Andy Jassy attributed the layoffs to not cost-cutting however to efforts to simplify operations and scale back forms after years of development. Amazon took a $1.8 billion pre-tax cost within the quarter for severance and different prices associated to the layoffs.
Amazon isn’t alone in spending massive on AI infrastructure or benefitting from the tax modifications.
Though they didn’t go into as a lot element as Amazon did, Microsoft and Google each referenced the 2025 U.S. tax legislation of their newest quarterly experiences, noting the reinstatement of rapid R&D expensing and accelerated depreciation. Each corporations are realizing comparable near-term tax advantages as they increase their AI and cloud infrastructure investments.
Lengthy-term tax provision nonetheless intact
For Amazon, the modifications in U.S. tax legislation mark a brand new chapter in a long-running nationwide debate. The corporate, which confronted criticism in years previous for paying little or no federal revenue tax regardless of sturdy earnings, has lengthy maintained that it pays what it owes below U.S. legislation.
Nonetheless, the rapid discount is just a part of the image.
Whereas Amazon’s money funds declined, the tax expense reported on its revenue assertion — a determine based mostly on accounting guidelines relatively than money paid — almost doubled. The corporate’s income-tax provision for the primary 9 months of 2025 was $14.1 billion, up from $6.9 billion in the identical interval final yr.
Amazon’s submitting says this improve was additionally pushed by the brand new tax act, which diminished different advantages, such because the deduction for earnings made abroad.
This $7.3 billion hole between its accounting provision ($14.1 billion) and its money tax invoice ($6.8 billion) reveals how the brand new legislation shifts the timing of tax funds relatively than eliminating them. In impact, the deductions scale back the corporate’s money outlay for taxes within the brief time period however will in the end be paid in future years as these property are depreciated on the corporate’s books.
