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Budget Deficit · Corporate Tax Avoidance · Nvidia · Tax Policy
Semiconductor giant Nvidia reported avoiding $6.8 billion in federal income taxes last year, achieving an effective federal income tax rate of 15.5 percent on $123 billion in U.S. pretax income, significantly contributing to the nation's budget deficit, according to the Institute on Taxation and Economic Policy (ITEP).
Nvidia's tax strategies included $4.2 billion from the Foreign-Derived Deduction-Eligible Income (FDDEI) deduction, $1.9 billion in unspecified tax credits, $1.4 billion from executive stock options, and $800 million from the new R&D expensing provision. This $6.8 billion avoidance reduced the entire nation’s corporate tax collections by 1.5 percent, which the Congressional Budget Office (CBO) clocks at $452 billion.
Nvidia also disclosed $1.9 billion in "uncertain tax benefits" for 2025, tax breaks the company believes would likely be disallowed on audit, a gamble ITEP suggests is savvy given the relationship between CEO Jensen Huang and President Trump and efforts to gut the IRS. Other large corporations, such as Bank of America and Goldman Sachs, also reported low effective federal income tax rates of 13.3 percent and 9.6 percent, respectively, on a combined $43 billion in U.S. pretax income, draining nearly $3.8 billion from the federal treasury.
ITEP emphasizes that these gigantic corporations, not just zero-tax companies, are most eroding the nation's tax system.
