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Waiting on GILTI's Big Beautiful Shift

June 17, 2025 (4 min read)

The One, Big, Beautiful Bill Act (H.R. 1), recently passed by the U.S. House, introduces major changes to the Global Intangible Low-Taxed Income (GILTI) regime that could impact multinational corporations. It makes the current 49.2% GILTI deduction rate permanent, preventing the scheduled drop to 37.5% under the Tax Cuts and Jobs Act (TCJA) (note: the 49.2% rate reflects analytical models, not a statutory figure) (see Section 111004, p. 862). The Act also cuts the GILTI deduction from 50% to 28.5%, raising the effective tax rate on GILTI income to about 15% at a 21% corporate tax rate, and eliminates the ability to carry back foreign tax credits, altering tax planning strategies (see Section 111005, p. 862). On a positive note, the Act allows Foreign-Derived Intangible Income (FDII) deductions to be used in net operating loss calculations without a taxable income limit under Section 250. These changes aim to reduce profit shifting to low-tax jurisdictions, but the bill awaits Senate review, where further amendments may occur. In the meantime, it’s an ideal opportunity to review your clients’ GILTI exposure and model the impact of the reduced deduction and eliminated carryback provisions to optimize their tax positions before potential Senate changes.

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