New Federal Tax Law Reshapes International Tax Landscape for U.S. Businesses

New One Big Beautiful Bill Act brings major changes for U.S. taxpayers with international operations, revising key rules from the 2017 Tax Cuts and Jobs Act.

LOS ANGELES, CA, UNITED STATES, February 9, 2026 /EINPresswire.com/ -- U.S. taxpayers with international operations face sweeping changes following enactment of the One Big Beautiful Bill Act, which significantly revised several international tax provisions originally introduced by the 2017 Tax Cuts and Jobs Act, according to a recent analysis.

Signed into law in July 2025, the legislation alters how multinational corporations and U.S. investors calculate foreign income, claim deductions, and determine controlled foreign corporation status, with many provisions taking effect beginning in 2026.

GILTI Replaced With Net CFC Tested Income

One of the most consequential reforms eliminates the prior Global Intangible Low-Taxed Income framework and replaces it with a new regime known as Net CFC Tested Income.

Under the new law, the deemed tangible asset exclusion is removed, the permanent Section 250 deduction is reduced to 40 percent, and the resulting effective U.S. tax rate increases to approximately 12.6 percent. At the same time, the allowable foreign tax credit percentage rises to 90 percent, meaning foreign effective tax rates near 14 percent may fully offset residual U.S. liability.

Tax professionals caution that these changes could increase exposure for asset-heavy foreign subsidiaries while reducing incentives to hold tangible assets offshore.

FDII Replaced With Foreign-Derived Deduction Eligible Income

The legislation also reforms Foreign-Derived Intangible Income, renaming the regime Foreign-Derived Deduction Eligible Income and simplifying its computation.

The new rules remove tangible income return and ratio calculations, make the Section 250 deduction permanent at 33.34 percent, and yield an effective rate of roughly 14 percent. Interest and research and development expense allocations are generally eliminated from the calculation.

Businesses with export-oriented operations or significant domestic production are encouraged to reassess eligibility and potential benefits beginning in 2026.

Controlled Foreign Corporation Rules Narrowed

The law reinstates Section 958(b)(4), reversing prior downward attribution rules that had expanded controlled foreign corporation classifications and increased compliance burdens.

In addition, a new provision, Section 951B, introduces targeted rules for foreign-controlled foreign corporations that may still trigger income inclusions for U.S. shareholders in certain circumstances.

Taxpayers are advised to revisit ownership structures and filing requirements to identify opportunities for relief while evaluating potential exposure under the new regime.

Expanded Pro Rata Share Rules

Another key change affects how U.S. shareholders calculate Subpart F and foreign income inclusions. Rather than focusing solely on year-end ownership, the law now requires inclusion for any portion of the year in which a taxpayer held stock while the entity qualified as a controlled foreign corporation.

The revision closes planning gaps tied to mid-year dispositions but introduces new compliance complexities for mergers, acquisitions, and reorganizations.

Planning in a Post-OBBBA Environment

Although the new law simplifies certain calculations, advisers emphasize that it introduces new modeling, tracking, and restructuring considerations for multinational enterprises.

SingerLewak’s International Tax team is assisting clients with evaluating the impact of the new provisions and developing forward-looking strategies.

Daniel Sheinfeld
SingerLewak
+1 310-481-7471
email us here

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