Tesla and 113 other companies paid no current federal income tax, but they still aren’t the biggest threats to the federal deficit, think tank warns

The effective corporate income tax rate is now the lowest it's been in decades, and a tapering revenue source for the U.S. government is raising concerns among some policy experts.

More than 700 profitable corporations paid 10.4% in current federal income taxes last year, according to a recent report from the Institute on Taxation and Economic Policy (ITEP), a progressive think tank—less than half of the 21% statutory federal corporate income tax rate. More than 250 of those companies paid effective tax rates below 7%, and 114 companies—including Tesla , Walt Disney , United Airlines , and DoorDash—paid no current federal income taxes, the report said.

ITEP calculated these tax rates based on analyses of annual financial reports filed to the Securities and Exchange Commission, and not IRS data, which lags behind SEC filings.

Corporate tax revenue has plummeted under the Trump administration, which has ushered in a series of tax breaks meant to boost capital investments, even as corporate profits have soared. Treasury Department data released earlier this month showed about a 15% reduction, about $70 billion, in corporate income tax revenue to $381 billion in the fiscal year that ended Sept. 30. The drop is part of a more than 25% reduction in corporate tax revenue since 2024, when former President Joe Biden was in office.

Diminishing corporate tax revenue has some policy experts concerned about a ballooning federal deficit and the U.S. government's ability to fund itself. The Congressional Budget Office projected President Donald Trump's One Big Beautiful Bill Act (OBBBA) would add $3.4 trillion to the federal deficit over the next decade, a result of a $4.5 trillion decrease in revenues offset by a $1.1 trillion decrease in spending. Meanwhile, corporate profits have soared to a record $4.7 trillion for the past 12 months through mid-2026, a 17% increase from the prior 12-month period.

Rather than blame the more than 100 companies paying nothing in federal income tax, however, it's the hundreds of corporations paying a reduced rate that present the bigger threat to tax revenue, according to Matt Gardner, ITEP senior fellow and coauthor of the report. The 706 companies saved a total of $198 billion last year as a result of corporate tax subsidies, while the 114 corporations that paid nothing accounted for a fraction of that.

"There's a real concentration of profits at the top, and when those companies pay anything less than 21%, that's really what is knocking a hole in our corporate tax laws right now," Gardner told Fortune . "Their profits were so huge that their tax avoidance is way more consequential for the federal government's capacity to function than the zero tax corporations are."