WASHINGTON — Federal corporate tax payments are projected to drop by $96 billion this year, even as major companies report strong profits, as a surge in artificial intelligence investment collides with new business tax breaks enacted by Republicans in 2025. Budget forecasters estimate payments will fall 25% after declining 15% last year. The decrease is tied in part to companies spending heavily on computer chips, data centers, power systems and other infrastructure eligible for accelerated deductions under the 2025 tax law. The incentives were not written specifically for artificial intelligence. They expanded research-and-development deductions, allowed businesses to immediately write off many investments and created a new subsidy for manufacturing structures. The Treasury Department also eased a corporate minimum tax adopted during the Biden administration, preserving more of the benefits for large companies. The timing has been particularly favorable for technology giants racing to expand their AI capacity. Goldman Sachs estimates that U.S. AI spending will approach $600 billion this year, with global spending reaching $1 trillion. “Now that we have a full expensing regime, and a secular trend towards an AI buildout — in which much of that is expensed — you’re going to see that exert downward pressure on corporate taxes,” said Donald Schneider, deputy head of U.S. policy at investment firm Piper Sandler. Microsoft reported in July that its current tax bill was $2.5 billion, down from $14.1 billion a year earlier, even as its income increased. Meta told investors that changes to the corporate minimum tax saved it billions of dollars. The Congressional Budget Office said business investment has exceeded its estimates, suggesting the tax provisions could cost more than anticipated. Nonresidential investment in the second quarter was $178 billion higher than projected by the Bureau of Economic Analysis. The precise effect of AI spending on tax receipts remains unclear because large companies generally make quarterly payments without providing detailed explanations. Federal analysts will have to examine annual tax returns to determine how much of the decline stems from investment deductions. Some tax experts and lawmakers argue the breaks are rewarding companies for investments they would have made regardless of the law. Matt Gardner, a senior fellow at the Institute on Taxation and Economic Policy, said the idea that companies are building AI infrastructure because of the tax code “doesn’t pass the laugh test.” “They’re going to do it either way,” Gardner said. “That they’re getting generous tax breaks for doing so is just icing on the cake for them.” The tax debate is unfolding alongside growing public resistance to the rapid construction of data centers, which consume large amounts of electricity and water. A July poll found that more Americans opposed data centers than supported them, reversing the balance earlier in the year. The issue is emerging as a political liability ahead of the 2026 midterm elections. Sen. Ron Wyden of Oregon, the top Democrat on the Senate Finance Committee, and Sen. Mark Warner of Virginia are seeking restrictions on tax benefits for data centers. Wyden has proposed barring data-center developers from using immediate expensing, Opportunity Zone benefits and certain real-estate tax advantages. “Massive corporations should pay their fair share,” Wyden said, calling for reforms to the corporate income tax and an end to what he described as “big giveaways for data centers.” Warner has proposed requiring data centers to meet energy-efficiency standards before companies could claim the accelerated depreciation deduction. The measure is intended to address the facilities’ demands on power, water and other public resources. Other factors are also depressing year-over-year corporate tax collections. Companies have completed many installment payments tied to a one-time charge on overseas profits created by the 2017 Republican tax law. Tariff-related payments and refunds have further complicated comparisons after the Supreme Court struck down tariffs imposed by the Trump administration. Supporters of the tax breaks argue that the federal government could eventually benefit if AI investments produce substantially higher profits. Companies can claim depreciation deductions only once, meaning the deductions may reduce tax payments now while leaving more taxable income exposed in later years. “The government is a silent partner in these investments,” said Kyle Pomerleau, a senior fellow at the American Enterprise Institute. “If Google and Meta and all these companies make it big, then the federal government is going to share in that.” For now, the immediate effect is a smaller federal revenue stream at a time when the national debt has surpassed $40 trillion and higher borrowing costs are adding pressure to the budget. The dispute over who should pay for the AI boom is likely to remain a central tax and infrastructure question for Congress.