CFO Slice

The 2025 tax law’s restoration of 100% bonus depreciation is providing major technology companies with significant upfront tax benefits as they invest heavily in AI infrastructure. Microsoft’s current federal tax expense, for example, fell from $14.1bn to $2.5bn year over year despite rising revenue, illustrating how accelerated deductions can help companies retain cash while funding data centers and other capital investments. Andrew Leahey, an assistant professor at Drexel Kline School of Law, argues that these tax incentives should not be credited with creating the AI investment boom. Microsoft announced plans to spend roughly $80bn on AI data centers six months before the tax law was signed, while competitive pressure is already pushing major technology companies to expand computing capacity. Accelerated depreciation may influence the timing, scale, or location of investments, but it also carries a public cost by delaying federal tax revenue. Mr. Leahey calls on the Treasury Department and Joint Committee on Taxation to quantify how much investment is genuinely generated by accelerated deductions, how much is simply brought forward, and how much would have occurred regardless.