By Richard Rubin

WASHINGTON -- Large companies are running into a problem as they try to claim some of the tax cuts that the Republican Congress passed this summer: They can't escape the corporate tax increase that Democrats passed three years ago.

Meta Platforms, Broadcom, Qualcomm and others are warning that they are now getting hit by the corporate alternative minimum tax, the 15% tax-rate floor that was part of the 2022 Inflation Reduction Act.

Basically, President Trump giveth, but former President Joe Biden taketh part of it away.

As Meta tallied the effects of Trump's "one big, beautiful bill," the technology giant said it would pay lower cash taxes in the short term. But the company also took a $15.9 billion one-time hit in the third quarter because of the long-run interaction between the new law and the 2022 law. Broadcom, the semiconductor and software company, signaled that it now has $1 billion in tax benefits it won't be able to use.

Qualcomm said Wednesday that it recorded a $5.7 billion charge because it expects to perpetually pay the minimum tax and thus can't use some deferred tax breaks; the company does expect lower cash tax payments.

The 2022 minimum tax, known as CAMT, requires companies with average income exceeding $1 billion to measure tax liability twice and pay whichever is greater. Companies calculate taxes under the regular system with its 21% rate, and then calculate taxes again with a 15% rate and a broader tax base that resembles the income they report to investors on financial statements. Companies with low foreign tax rates and significant stock-based compensation can be particularly susceptible to CAMT, and it was already hitting some corporations before this year's new law.

That law included tax cuts that companies have been cheering -- but those changes exacerbate the CAMT challenge. Notably, the law lets big companies accelerate deductions for research expenses into 2025 and 2026. It also expands a tax deduction for exporters that is often used by technology and aerospace companies, which Qualcomm cited in its disclosure. For some companies, those changes are driving their regular taxes down so far that they are pushed into CAMT. As a result, they can't get all the benefits they would otherwise claim.

This is exactly what CAMT was designed to do, the tax's defenders say.

"The backstop becomes more important when the barn door is open," said Matt Gardner, a senior fellow at the Institute on Taxation and Economic Policy, a progressive group.

Companies are pressing the Treasury Department for relief, particularly on the way that CAMT limits the deduction for research expenses. The National Association of Manufacturers, the R&D Coalition and the National Foreign Trade Council sent letters urging the administration to write rules that would be favorable to companies.

Research shift

The option to accelerate research deductions was Congress's attempt to solve a problem it created in Trump's first term. Back then, Republicans forced companies to start spreading domestic research deductions over five years instead of taking them immediately. That shift was part of the 2017 law and took effect in 2022. That move helped the GOP Congress hit its budget targets but it raised taxes and shrank companies' incentive to do research.

Republicans made reversing that feature a priority in 2025, and this year's tax law brought back immediate write-offs for research going forward. The CAMT problem stems from how Congress tried to give companies access to delayed deductions for past research. Smaller companies can amend old tax returns to claim the deferred deductions immediately. Larger companies can claim them this year or spread them between 2025 and 2026.

In the final busy weeks before Congress voted, many large companies didn't fully analyze the effects on their CAMT liability, said Rohit Kumar, co-leader of the national tax practice at accounting firm PwC. Now, he said, he has talked to about 100 large companies and hasn't found one planning to accelerate its research deductions.

"The CAMT clawback seems to be mostly, if not entirely, defeating the intent of Congress," said Kumar, a former Senate Republican aide. "Everyone thought they were getting these accelerated deductions and now they are unhappily discovering that maybe they aren't."

Companies have started disclosing CAMT problems in securities filings, with Meta's $15.9 billion charge catching the most attention.

Lockheed Martin flagged a potential effect. Airbnb said Thursday that it was taking a $213 million charge, telling investors that it had "no prudent and feasible tax-planning strategies" to use certain tax credits because of CAMT. Meta, Airbnb, Lockheed and Broadcom didn't respond to requests for comment or declined to elaborate on their filings.

Even though Congress didn't explicitly provide a new CAMT exception, companies have some reasons to be hopeful for administrative actions. In 2022, Congress gave the Treasury Department broad authority to implement CAMT.

Under the Trump administration, Treasury officials have already shown a willingness to soften CAMT. In September, Treasury said it would relax a rule governing how cryptocurrency holdings are counted toward the tax. That removes a potential burden on Strategy, the software company formerly known as MicroStrategy that has significant bitcoin holdings.

"There's a pretty clear incentive for a fiscally responsible Congress and a fiscally responsible administration to make sure this backstop is working properly," Gardner said. "The stakes are higher now than they were a year ago for a properly functioning CAMT."

Democratic origins

Unlike many of Biden's other proposed tax increases, CAMT squeaked through Democrats' slim majority in 2022. Democrats created CAMT in response to reports showing relatively low tax liabilities for profitable companies such as Amazon. That wasn't evidence of tax evasion. Instead, it was partly a function of companies taking tax breaks that Congress approved and partly a reflection of differences between tax accounting and financial accounting.

CAMT was designed to be a floor so that large, profitable companies had to pay something. Many tax experts dislike CAMT. They worry that it is too complicated and relies on accounting definitions of income that don't necessarily work well for tax law. The law can make it harder for investors to understand companies' actual tax burden and incentives.

"It's working like it's supposed to work," said Michelle Hanlon, an accounting professor at the Massachusetts Institute of Technology. "It's just a bad law."

Write to Richard Rubin at richard.rubin@wsj.com

(END) Dow Jones Newswires

November 08, 2025 21:00 ET (02:00 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.