Just Politics

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Cash Windfall From Trump's Tax Law Is Starting to Show Up at Big Companies; Investors are watching boosts to free cash flow as estimates of tax savings trickle out
Monday, August 4, 2025, 5:30 AM ET
By Jonathan Weil
The magnitude of the cash savings from this summer’s federal tax legislation is starting to take shape at America’s biggest companies.

AT&T recently said it expected $1.5 billion to $2 billion in cash tax savings this year, due to provisions in the tax-and-spending law dubbed the One Big Beautiful Bill Act. The high end of the range is equivalent to an 11% boost to analyst estimates of 2025 free cash flow before the law was enacted. AT&T estimated annual cash tax savings of $2.5 billion to $3 billion in both 2026 and 2027.

In short, changes like allowing upfront depreciation of assets and immediate expensing of research-and-development expenses will bring swift windfalls to American corporations but also lasting tailwinds. This in turn has provided incremental fuel to stock markets, a counterweight to risks from tariffs and other policy uncertainty.

The cash savings won’t affect reported earnings, which are calculated using different accounting rules than taxes. It won’t all ultimately end up in free cash flow either, because AT&T plans to reinvest much of the savings in new capital projects. But the change is still a positive for the company’s shareholders and valuation, all other things being equal.

“More cash in the company’s pocket. Less cash in Uncle Sam’s pocket. That in theory should be good for investors,” said David Zion, founder of Zion Research Group and a longtime accounting and tax analyst.