(Bloomberg) - The Treasury Department is preparing to release a corporate tax workaround that would deliver large tax savings to companies including Salesforce Inc. and Qualcomm Inc.
The tax guidance, which could come as early as next week, would allow companies to take full advantage of lucrative research and development tax breaks included in President Donald Trump’s “One Big Beautiful” tax bill, according to people familiar with the matter.
The Treasury proposal will address an issue that has vexed major corporations and their Washington lobbyists for months: a Biden-era 15% minimum tax on companies earning at least $1 billion prevents businesses from fully claiming those R&D deductions.
The guidance will fix those concerns from the business sector, said the people, who requested anonymity to discuss something that has not yet been made public. The R&D tax breaks — along with Treasury’s planned changes — are especially valuable to research-intensive businesses, including in tech, pharmaceuticals and manufacturing.
The Treasury did not respond to a request for comment.
Earlier: Lucrative Trump Tax Break for Tech, Pharma Hits Biden-Era Snag
The timing of the Treasury guidance release could slip, one of the people cautioned, noting that it is in the final stages of review.
Trump’s tax bill allows companies to claim retroactive R&D deductions — estimated to be worth $67 billion. But that change was so generous that it would trigger the 15% minimum tax for a wide swath of companies.
Airbnb Inc., Broadcom Inc. and Applied Materials Inc. are among companies that have disclosed in regulatory filings that their super-sized deduction could trigger the 15% corporate alternative minimum tax or prevent them from claiming hundreds of millions of dollars in tax credits related to past payment of the minimum tax.
The tax guidance is the latest win for large corporations and would provide additional tax benefits to companies on top of the tax incentives they won in Trump’s tax bill which passed Congress in July. That bill restored full, upfront deductions of R&D investments, which had lapsed in 2022.
That legislation also made permanent tax breaks for loan interest and expanded write-offs for equipment purchases, in addition to increasing the state and local, or SALT deduction.
The forthcoming Treasury guidance would also be the latest in a series of changes the department has made in recent months to weaken the 15% minimum tax, which former President Joe Biden signed into law in 2022. Already this year, Treasury created more lenient rules for the tax; granted exemptions to insurance, shipping and utilities companies; and allowed unrealized cryptocurrency gains to be excluded from the levy.
Tax policy experts say the department has been able to make those changes because Congress, in the law establishing the corporate minimum tax, gave an unusual amount of leeway to Treasury to implement it.
Corporations have also complained about the interaction between the R&D deduction and international tax rules from Trump’s first term that discourage companies from shifting profits to lower tax jurisdictions overseas. But it’s unclear whether the upcoming guidance would address that, or whether Treasury would have the statutory ability to do so.
The Treasury guidance is likely to draw swift rebuke from progressive Democrats, including Senator Elizabeth Warren of Massachusetts, who has been outspoken in her opposition to efforts to limit the scope of the corporate minimum tax.
By Caitlin Reilly
