Tesla disclosed zero current federal income tax on nearly $5.7 billion in U.S. income for 2025, according to its latest annual financial report. Over the past three years, the company has paid just 0.4 percent of its U.S. profits in federal taxes, far below the 21 percent statutory rate. This outcome stems from various tax breaks, including accelerated depreciation and research credits.
Tesla's annual financial report, released recently, reveals that the company reported almost $5.7 billion in U.S. income for 2025—nearly double the $2.98 billion from 2024—yet owed precisely zero in current federal income tax. This marks a continuation of favorable tax treatment, as over the three years from 2023 to 2025, Tesla accumulated $12.58 billion in U.S. income while paying only $48 million in current federal taxes, equating to an effective rate of 0.4 percent.
Several mechanisms contributed to this low liability. In 2025 alone, accelerated depreciation saved Tesla almost half a billion dollars in taxes. Tax breaks for executive stock options reduced the bill by $172 million, and research and development credits provided $352 million in savings. The company also applied net operating losses from prior years to offset current income, though the exact impact on U.S. versus foreign income remains unclear.
New income tax disclosure rules effective in 2025 offer clearer insights into Tesla's global tax payments. Worldwide, the company paid $1.2 billion in cash income taxes, with over $1 billion directed to China and other foreign governments. Only $28 million went to the U.S., likely tied to earlier tax years. Current federal tax reflects the estimated liability on 2025 income, distinct from cash payments that may cover multiple periods.
These figures are derived from Tesla's report, adjusted for warranty reserves and excluding non-controlling income on which no tax is due. The tax breaks, enabled by recent modifications to corporate tax laws by Congress and the Trump administration, highlight how profitable firms like Tesla—led by Elon Musk—can legally minimize U.S. federal tax obligations. While not illegal, this situation underscores ongoing debates about corporate tax equity, with Tesla receiving over $1.1 billion in federal income tax breaks from U.S. taxpayers in 2025 alone.
