| Global Intangible Low-Taxed Income (GILTI) – now renamed to Net CFC Tested Income (NCTI) | - Effective tax rate of 10.5%, effectively increased to 13.125% after Dec. 31, 2025
- 50% of Section 250 deduction, scheduled to be reduced to 37.5% after Dec. 31, 2025
- 20% reduction of foreign tax credit (FTC)
| - The initial House bill reduced the Section 250 deduction to 49.2%, which would have led to a permanent tax rate on tested income of 10.668%
| - The final bill establishes a permanent tax rate on NCTI of 14%, reducing the Sec 250 deduction to 40%
- No allocation of interest and R&D deductions for GILTI foreign tax credit (FTC) calculation purposes
- “Directly allocable” expenses can still be allocated
- Elimination of qualified business asset investment (QBAI)
- The FTC reduction has been changed to 10%
- Provisions effective for tax years beginning after Dec. 31, 2025
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| Foreign-Derived Intangible Income (FDII) – now renamed to FDDEI | - Effective tax rate of 13.125%, increasing to 16.4% after Dec. 31, 2025
- 37.5% deduction rate available, set to reduce to 21.875% after Dec. 31, 2025
| - Permanent effective tax rate of 13.335%
- Permanent 36.5% reduction
| - The FDII deduction is reduced to 33.34%, leading to a permanent 14% effective tax rate
- No allocation of interest and R&D deductions
- “Properly allocable” expenses can still be allocated
- Elimination of qualified business asset investment (QBAI)
- Provisions effective for tax years beginning after Dec. 31, 2025
- Carve-out for sales or other dispositions of Section 367(d)(4) intangibles and property subject to depreciation or amortization
- Transactions after June 16, 2025
- No carve-out for passive income
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| Base Erosion and Anti-Abuse Tax (BEAT) | - Effective tax rate of 10.0%, set to increase to 12.5% after Dec. 31, 2025
- All general business credits subtracted from BEAT tax after Dec. 31, 2025
| - Rate was set to increase to 10.1%
- Permanently allows subtraction of general business credits
| - Effective on Jan. 1, 2026, permanent 10.5% tax rate on BEAT (11.1% for banks/securities dealers)
- Unfavorable treatment of R&D and certain other credits scheduled to take effect after Dec. 31, 2025 has been eliminated
- No reduction to base erosion threshold, no high-tax exception and no inclusion of capitalized interest
- Only excess credits reduce BEAT tax
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| Section 899 | | - Gives the U.S. a tool to retaliate against foreign tax measures that the U.S. Treasury considers "unfair" or "discriminatory" towards U.S. corporations or citizens
- Would levy an additional tax on “Applicable Persons” from countries deemed discriminatory under Section 899
- Would increase by 5% each year the country is considered discriminatory, capped at 20% above the applicable U.S. statutory tax rate
- Tax rate for effectively connected income would cap at 41% (21% plus 20% Section 899 surcharge) for corporations and 57% (37% plus 20% Section 899 surcharge) for individuals
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| CFC look-through rule (Section 954(c)(6)) | - Certain typically Subpart F income such as dividends, interest, rents and royalties received from a related CFC are not treated as foreign personal holding income
- Provision was set to expire Dec. 31, 2025
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| Downward attribution | - TCJA repealed Section 958(b)(4), which led to attribution of stock owned by foreign persons to U.S. persons causing CFC status
| | - Section 958(b)(4) has been reinstated to preclude downward attribution from a foreign person to a U.S. person for purposes of determining CFC status
- New Section 951B added to apply CFC rules to certain foreign-controlled U.S. shareholders
- Provisions effective for tax years beginning after Dec. 31, 2025
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| Pro-rata share rules | U.S. shareholders include income if:
• The foreign corporation is a CFC at any time during the year and
• The shareholder owns stock on the last day it is a CFC | | - A Subpart F income inclusion will apply to any U.S. shareholder who owned shares at any point during the year while the corporation was a CFC
- Ownership of the CFC at the end of the year is irrelevant
- Provisions effective for tax years beginning after Dec. 31, 2025
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| FTC limitation | - Income from inventory produced in the U.S. is partly U.S. and foreign sourced
- Foreign taxes paid by a CFC on income distributed from Previously Taxed Earnings and Profits (PTEP) from GILTI can be credited
| | - Income from U.S. produced inventory sold abroad can be treated as up to 50% foreign source
- 10% haircut on the deemed paid foreign taxes on income distributed from PTEP from GILTI
- Provisions effective for tax years beginning after Dec. 31, 2025
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| One-month deferral election under Section 898(c) | - A Specified Foreign Corporation (SFC) was able to elect a tax year starting one month before the year end of its majority U.S. shareholder
| | - Eliminates the ability to make one-month deferral election for CFC accounting periods
- Provisions effective for tax years beginning after Nov. 30, 2025
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| Remittance transfer tax | | - Proposed a new 3.5% excise tax on remittances sent from foreign persons to U.S. recipients
| - Establishes a 1% federal excise tax and limits it to cash transfers sent from the U.S. to a foreign country
- Credit and debit card transfers, as well as cryptocurrency or stablecoin transfers are also not remittance transfers
- Provisions effective for tax years beginning after Dec. 31, 2025
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