Palantir Technologies, the data analytics company that has become one of the most valuable firms in the world, managed to pay exactly nothing in federal income tax on $1.5 billion in US income for fiscal year 2025. At the statutory corporate rate of 21%, that would have been roughly $330 million owed to the IRS. Instead, the company kept every penny.
By early 2026, the company’s effective tax rate crept up to a whopping 1.37%.
How Palantir pulled it off
The secret sauce here is not particularly exotic. Palantir has leveraged provisions under Trump-era tax legislation that allow companies to immediately deduct research and development expenses. For a company that bills itself as an AI and data analytics powerhouse, R&D spending is essentially the entire business.
Palantir’s platforms serve US agencies including Immigration and Customs Enforcement, and the company maintains contracts with international defense partners including the Israeli military. The company is, in the most literal sense, a government contractor that does not pay the government.
