Meta classifies AI data centers as 'experimental' to claim billions in tax credits

Meta Platforms told the Internal Revenue Service that its artificial intelligence data centers constituted a "giant experiment that could fail," allowing the company to shield nearly $4 billion from its 2025 corporate tax bill by classifying the facilities as experimental research models, The New York Times reported Tuesday. The strategy positions the tech giant as the largest beneficiary of the federal research credit among publicly traded companies for the year.

Decades-Old Credit

The classification exploits a provision dating to the 1980s that was designed to spur innovation by allowing deductions for supplies used in experimental research rather than standard business operations. People familiar with the company’s operations said Meta classified commercially proven processors — including chips purchased from Nvidia — as experimental supplies when deployed in artificial intelligence facilities, according to the newspaper.

Meta Defense

Meta defended the practice, stating it invested $200 billion in research over the past five years, including $57 billion 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," the company added.

The provision was originally intended to support laboratory experimentation rather than the deployment of established commercial hardware in massive data centers. Sources told the outlet that the reclassification of commercially proven hardware as experimental supplies drove the substantial tax reduction.