Jun 18, 2020 - Economy

Corporations reap windfalls from coronavirus tax breaks

Illustration of a coin purse full of stacks of money with a shadow of a hand hovering over it menacingly.

Illustration: Aïda Amer/Axios

Large companies have started pocketing billions of taxpayer dollars thanks to tax breaks tucked into the federal coronavirus stimulus.

Why it matters: Corporations are getting sizable, multiyear cash benefits, while most Americans received one-time, $1,200 checks to offset the economic turmoil and mass unemployment arising from the pandemic.

Details: Congress created several sizable tax provisions for companies in the main coronavirus aid package, especially these three:

  • Net operating loss carryback: Companies can take any operating losses they recorded in 2018, 2019 and 2020 and apply them to any of the previous five years to offset profits — in essence, they would be recouping taxes they already paid.
    • President Trump's tax cuts eliminated these so-called loss "carrybacks" as a way to pay for the slashed corporate tax rate.
  • Business interest expense deduction: The amount of interest that companies could deduct on tax forms previously was capped at 30% of adjusted profits, and Congress raised that limit to 50%.
    • This benefits companies that sit on a lot of debt, especially those backed by private equity firms, which often pile debt on.
  • Employee retention tax credit: Companies that continue to keep people employed during the pandemic get a 50% tax credit to subsidize their workers' wages, up to $5,000 per worker.

Together, companies will reap more than $155 billion from these three provisions this year and in 2021, according to estimates from the Joint Committee on Taxation.

  • These tax changes, especially the rules around net operating losses, are "incredibly impactful," said Chris Bell, a tax expert at accounting firm Moss Adams.

Between the lines: Those windfalls have started appearing in companies' first-quarter financial disclosures. The Wall Street Journal first reported some of the early gainers, and Axios has found others:


  • Boeing registered an $862 million tax refund in the first quarter almost entirely due to the new operating loss carryback rule.
  • Airlines also recorded large tax refunds — $649 million for American, $50 million for Southwest and $47 million for Spirit — largely because they were able to carry losses backward.

Health care

  • Community Health Systems, a hospital chain that has struggled in recent years, pocketed a $183 million tax refund in the first quarter and registered a $0.15 per-share profit almost entirely because of these new tax changes.
  • Another hospital operator, Tenet Healthcare, registered $91 million in new tax benefits, mostly due to the higher interest expense deduction.


  • Business at restaurants, clothing stores and other retailers started coming to a standstill by the end of March, resulting in both large losses and large tax breaks.
  • Tax refunds totaled $163 million at Ross Stores, $60 million at Children's Place, $64 million at Dick's Sporting Goods and $20 million at Bloomin' Brands — a majority of which was due to loss carrybacks.

The big picture: The tax breaks were supposed to help ease companies' red ink and keep paychecks flowing for workers. But most of the companies mentioned above, for example, have either furloughed employees or are pushing for buyouts.

What to watch: The Congressional Budget Office "anticipates an increase in corporate tax refunds over the remainder of the year, resulting from the CARES Act's temporary modifications to the treatment of net operating losses."

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