Meta Platforms, Inc. has reportedly classified certain artificial intelligence data centers as "pilot models" to qualify for federal research tax credits, according to a New York Times report. The company is utilizing this classification to claim the research and experimentation tax credit, a federal incentive designed to encourage investment in research and experimental projects.
Meta’s research tax credits reduced its tax bill by $3.9 billion in 2025, a significant increase from $2 billion in 2024 and $700 million in 2023, according to company filings cited by The Times. The tax claims reportedly involve chips purchased for these data centers, specifically Nvidia Corp. (NASDAQ: NVDA) GPUs.
The classification of the data centers as "pilot models" is reportedly a gray area. Meta’s accountants have raised concerns that the Internal Revenue Service could challenge the treatment of these assets, according to people familiar with the company’s operations. Meta’s auditor, EY, has reportedly promoted this tax strategy to other AI companies.
A Meta spokesperson, Andy Stone, stated that the company has invested $200 billion in research and development over the past five years, including $57 billion in the last year. Stone noted that the company uses tax incentives established by Congress to support domestic investment in research, technology, and jobs.
Despite these tax benefits, Meta’s massive AI investments are weighing on its finances. The company reported quarterly free cash flow of just $784 million, which was roughly $8 billion below the year-ago period. Meta is among several major technology companies, including Amazon.com, Inc. (NASDAQ: AMZN), Microsoft Corp. (NASDAQ: MSFT), and Alphabet Inc. (NASDAQ: GOOG) (NASDAQ: GOOGL), spending heavily on AI infrastructure.
