Meta reportedly calls its AI data centers ‘pilot models’ — and its research tax credits jumped from $700M to $3.9B in 2 years. Who’s paying for it?

Meta uses that label to claim a federal research tax credit on the Nvidia (NASDAQ:NVDA) chips inside the data centers, a practice the Times dates to late 2024. Meta did not immediately respond to Moneywise’s request for comment.

Meta’s second-quarter guidance calls for $130 billion to $145 billion in spending this year on buildings and equipment, much of it to build out AI computing power. “AI is accelerating our core business today,” CEO Mark Zuckerberg said in the same release.

No other publicly traded company gets more out of the credit, according to a Times review of securities filings.

How Meta’s research tax credit strategy reportedly works

The credit dates to 1981, when lawmakers worried Japan was pulling ahead in technology, according to the Times. Most companies claim it mainly on what they pay researchers and engineers.

Supplies can count too. IRS guidance says they have to be used in “qualified research,” meaning experiments to solve a technical unknown.

Meta treats its chips as supplies in that kind of research, according to the Times. The IRS has pushed back before when companies tried to claim the credit on off-the-shelf equipment, the Times reported.

Andre Shevchuck, who leads the research tax credit practice at California-based advisory firm BPM, told the Times the approach is “kind of wild and out there.”

“Meta is claiming billions of dollars in tax benefits that its own accountants are telling investors are at risk of being overturned by the IRS,” Lisa De Simone, who teaches accounting at the University of Texas and previously worked as a tax adviser at EY, told the Times.

Former Rep. James Shannon, D-Massachusetts, sponsored the credit in 1981. He told the Times it was meant to support “people power, knowledge, information.”

When he heard a tech company was claiming it for AI data centers, Shannon said, “This has gone way, way beyond what anybody could have imagined.”

Meta spokesperson Andy Stone said the company has put $200 billion into research and development over the past five years, $57 billion of it last year.

“Like other companies that invest at this scale, we use the tax incentives Congress established decades ago to encourage this type of domestic investment,” Stone said in a statement to the Times.

How much the research tax credit costs taxpayers

Congress’ Joint Committee on Taxation projects the research credit will cost the government $32.1 billion in corporate tax revenue in fiscal year 2025. By the Times’ math, Meta’s share tops 10%.

JCT expects that cost to climb every year, to $41.3 billion by fiscal 2029. Over five years, the total comes to $183.2 billion — more than any other corporate tax break except a lower tax rate on U.S. companies’ overseas profits.

Apple (NASDAQ:AAPL) claimed $1.05 billion in research credits for its 2025 fiscal year. Alphabet (NASDAQ:GOOGL) claimed about $2.09 billion in federal research credits in 2025. Meta’s $3.9 billion beats the two combined.

It’s also 15 times the $260 million in research tax credits that Merck (NYSE:MRK) claimed in 2025. Merck makes the cancer drug Keytruda.

Shevchuck told the Times the approach might work “if you had a data center that you’re building out to cure cancer.”

EY — Meta’s auditor and one of the firms that advised it on the credit — has taken the chip strategy to other companies, according to the Times.

Meta is separately set to receive $3.3 billion in state and local tax breaks for its Hyperion data center in Louisiana.

Meta’s IRS fights and $18.74B in uncertain tax benefits

Meta and the IRS are also in U.S. Tax Court over an earlier research credit claim. The agency wants back about $355 million in credits that Meta tied to $4.1 billion in Zuckerberg’s stock compensation from 2012 and 2013, according to Bloomberg Tax.

Meta argues Zuckerberg personally wrote code and oversaw Facebook’s technology in 2005, when it granted the options. The IRS points to the option contract, which says the options weren’t payment for anything Zuckerberg did before 2008.

In a separate case over how Meta priced deals with its own foreign subsidiaries, the IRS says the company shifted profits to the Cayman Islands. The agency is seeking nearly $16 billion, including penalties, according to the Times. Meta is fighting the case in Tax Court, its annual filing shows.

Meta’s gross unrecognized tax benefits — tax savings it has claimed but hasn’t counted toward its profits because they might not hold up — reached $18.74 billion as of June 30. That’s up 45% from $12.91 billion two years earlier. Meta says those benefits are primarily tied to “uncertainties with our research tax credits” and its foreign-subsidiary deals.