The U.S. Treasury Department is preparing to release a corporate tax "workaround" that could provide significant tax savings for companies like Salesforce.com and Qualcomm.
According to sources familiar with the matter, the tax guidance, which may be announced as early as next week, will allow businesses to fully utilize the generous research and development (R&D) tax incentives included in former President Trump's "One Big Beautiful tax bill."
The Treasury's proposal aims to address a long-standing issue for large corporations and their Washington lobbyists: the 15% corporate minimum tax, introduced during the Biden administration for companies with annual revenues of at least $1 billion, has prevented businesses from fully claiming these R&D deductions.
The guidance is expected to address corporate concerns, particularly for R&D-intensive industries such as technology, pharmaceuticals, and manufacturing.
While the guidance is still under final review, its release could be delayed.
Trump's tax bill allows companies to claim retroactive R&D deductions, estimated to be worth $67 billion in total. However, this highly generous benefit could also trigger the 15% corporate minimum tax for many firms.
Companies like Airbnb, Broadcom, and Applied Materials have disclosed in regulatory filings that their substantial deductions may trigger the Corporate Alternative Minimum Tax (CAMT) or prevent them from claiming hundreds of millions in related tax credits tied to prior minimum tax payments.
The new guidance represents another major win for large corporations, providing additional tax benefits on top of incentives already secured through Trump's tax bill, which passed Congress in July. The legislation reinstated full and immediate deductions for R&D investments—a provision that had expired in 2022.
Additionally, the bill made loan interest deductions permanent, expanded depreciation deductions for equipment purchases, and increased the cap on state and local tax (SALT) deductions.
The upcoming Treasury guidance will be the latest in a series of adjustments weakening the 15% corporate minimum tax established by the Biden administration in 2022. Earlier this year, the Treasury relaxed rules to exempt insurance, shipping, and utility companies while excluding unrealized cryptocurrency gains from taxable income.
Tax policy experts note that the Treasury has broad discretion in implementing corporate minimum tax laws, allowing for these modifications.
Businesses have also raised concerns about the interaction between R&D deductions and international tax rules from Trump's first term, designed to prevent profit shifting to low-tax jurisdictions. It remains unclear whether the upcoming guidance will address this issue or if the Treasury has the legal authority to do so.
The guidance is expected to draw swift criticism from progressive Democrats, including Senator Elizabeth Warren of Massachusetts, who has publicly opposed any efforts to limit the scope of the corporate minimum tax.
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