This paper examines the reasons behind U.S. corporations holding significant amounts of cash, focusing on the tax costs associated with repatriating foreign income as a potential explanation. The authors use data from Compustat and the Bureau of Economic Analysis (BEA) to analyze the relationship between repatriation tax burdens and cash holdings. Key findings include: 1. **Tax Costs and Cash Holdings**: Firms facing higher tax costs when repatriating earnings hold more cash. A one standard deviation increase in the tax burden is associated with a 7.9% increase in the ratio of cash to net assets. 2. **Foreign vs. Domestic Cash Holdings**: Repatriation tax burdens induce firms to hold more cash abroad. The median firm facing above-average repatriation tax burdens holds 47% of its cash abroad, compared to 26% for firms facing below-average tax burdens. 3. **Affiliate Cash Holdings**: Affiliates that face high tax costs when repatriating earnings hold higher levels of cash than other affiliates. Technology-intensive firms exhibit a higher sensitivity of affiliate cash holdings to repatriation tax burdens. 4. **Control Variables**: The analysis controls for various factors such as firm size, leverage, and investment opportunities, which are known to affect cash holdings. The paper concludes that the tax costs associated with repatriating foreign income significantly influence corporate cash holdings, providing a new perspective on the existing literature that primarily focuses on transaction costs and precautionary motives.This paper examines the reasons behind U.S. corporations holding significant amounts of cash, focusing on the tax costs associated with repatriating foreign income as a potential explanation. The authors use data from Compustat and the Bureau of Economic Analysis (BEA) to analyze the relationship between repatriation tax burdens and cash holdings. Key findings include: 1. **Tax Costs and Cash Holdings**: Firms facing higher tax costs when repatriating earnings hold more cash. A one standard deviation increase in the tax burden is associated with a 7.9% increase in the ratio of cash to net assets. 2. **Foreign vs. Domestic Cash Holdings**: Repatriation tax burdens induce firms to hold more cash abroad. The median firm facing above-average repatriation tax burdens holds 47% of its cash abroad, compared to 26% for firms facing below-average tax burdens. 3. **Affiliate Cash Holdings**: Affiliates that face high tax costs when repatriating earnings hold higher levels of cash than other affiliates. Technology-intensive firms exhibit a higher sensitivity of affiliate cash holdings to repatriation tax burdens. 4. **Control Variables**: The analysis controls for various factors such as firm size, leverage, and investment opportunities, which are known to affect cash holdings. The paper concludes that the tax costs associated with repatriating foreign income significantly influence corporate cash holdings, providing a new perspective on the existing literature that primarily focuses on transaction costs and precautionary motives.