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How much did US corporate tax expenditures total in 2022 and 2023?
Executive Summary
US corporate tax expenditures are consistently reported in the low-to-mid hundreds of billions of dollars annually: Joint Committee on Taxation (JCT) materials and congressional analyses place corporate tax expenditures at about $166 billion in 2022 and roughly $164.2 billion in 2023, while total tax expenditures (individual plus corporate) are far larger, exceeding $1.5 trillion in 2023. These figures come with important methodological caveats — different agencies and reports use different baselines, fiscal calendars, and inclusion rules — so apparent year-to-year changes reflect both policy shifts and technical measurement differences. [1] [2]
1. Why the headline numbers point to a two-hundred-billion-dollar order of magnitude — and who says so
Multiple authoritative analyses converge on the same order of magnitude for corporate tax expenditures: JCT reporting and Congressional Research Service work show corporate tax expenditures around $160–$170 billion for 2022–2023. The Joint Committee on Taxation reported $166 billion in corporate tax expenditures in 2022, and the Congressional Research Service summarized estimates placing 2023 corporate tax expenditures at about $164.2 billion. These numbers are reported alongside much larger individual tax expenditures—for example, JCT listed individual expenditures near $1.559 trillion in 2022—which explains why corporate items make up a relatively small share of the tax‑expenditure total despite being large in absolute terms. The consistency across JCT and CRS reinforces that corporate tax expenditures are substantial but materially smaller than individual tax breaks. [1] [2]
2. What drives the decline from earlier years and why the Tax Cuts and Jobs Act matters
Observers attribute the decline in measured corporate tax expenditures from mid‑decade peaks (for example, $267 billion in 2016 and $202 billion in 2018) principally to the Tax Cuts and Jobs Act (TCJA) of 2017 and its reduction of the statutory corporate tax rate. Lower statutory rates reduce the revenue forgone from deductions and preferences, shrinking the dollar value of many corporate tax expenditures even if the underlying preferences remain. JCT analysts explicitly note this mechanical effect: when the tax rate falls, the budgetary cost of deductions and accelerated cost recovery falls as well. This technical point explains part of the downward trend in corporate tax‑expenditure totals through 2022 and into 2023. It also underlines why year‑to‑year comparisons must consider statutory rate changes, not just changes in utilization. [1]
3. Why different reports give different totals — definitions, baselines, and timing matter
Different agencies produce different totals because measurement choices matter: the Treasury, JCT, and CRS sometimes use distinct baselines, include or exclude categories such as cost recovery, treat fiscal-year versus calendar-year data differently, and update estimates with evolving models. Treasury’s aggregated figures for “tax expenditures” listed 171 items and a combined cost of roughly $1.54 trillion in 2023, but that total covers both individual and corporate items and hinges on Treasury’s definition and chosen baseline. JCT’s and CRS’s corporate-specific figures focus on the corporate income tax base and use Congressional baselines; as a result, the corporate line items reported by each source are broadly comparable but not identical. Analysts and policymakers must therefore examine the methodological notes, not just headline totals, to understand what is—and isn’t—being counted. [3] [1] [4]
4. The policy context: rising targeted corporate subsidies and the Inflation Reduction Act
While aggregate corporate tax‑expenditure totals fell in the wake of TCJA, several analysts forecast targeted corporate subsidies to increase in specific areas because of recent legislation and new credits. JCT and other analysts highlight that legislation such as the Inflation Reduction Act introduces or expands targeted tax incentives that can raise the cost of corporate tax expenditures even if the aggregate corporate total remains muted by rate effects. This creates a policy tradeoff: the overall corporate tax‑expenditure dollar figure may stay modest relative to individual breaks, yet targeted industry or activity incentives can concentrate benefits and materially affect particular sectors’ effective tax rates and federal support. Understanding the fiscal and distributional implications requires drilling into the specific credits and preferences rather than relying solely on an aggregate corporate line. [1]
5. Bottom line for readers and policymakers: use the numbers, but read the footnotes
The verified, consistently reported corporate totals — about $166 billion for 2022 and roughly $164.2 billion for 2023 — provide a solid baseline for budget conversations, but they do not tell the whole story: measurement choices, statutory rate changes, and the growth of targeted credits drive both the headline totals and the policy implications. Treasury, JCT, and CRS publications each offer complementary views and technical notes that are essential for interpreting trends; relying on a single headline without checking the underlying definitions risks mischaracterizing whether corporate tax support is rising, falling, or shifting in composition. Readers and policymakers should therefore treat the corporate totals as accurate order‑of‑magnitude estimates while consulting the methodological appendices when making comparisons or policy proposals. [1] [2] [4]