The One Big Beautiful Bill Act of 2025 (OBBBA), enacted in July 2025, renames the Global Intangible Low-Taxed Income (GILTI) regime as Net CFC Tested Income (NCTI) and modifies the operative parameters of the regime for tax years beginning after December 31, 2025. The rename is more than cosmetic: the OBBBA also resets the Section 250 deduction percentage and the effective US tax rate on the inclusion.
For NCTI inclusions in tax years beginning after December 31, 2025, the Section 250 deduction is set at 40%. Combined with the headline 21% US corporate tax rate, this produces an effective US tax rate of approximately 12.6% on NCTI inclusions, before consideration of the foreign tax credit and the post-OBBBA expense allocation rules. The 90% foreign tax credit rate (i.e., the 10% haircut) on NCTI-related foreign taxes continues to apply, as do the rules requiring the allocation of a portion of US-incurred expenses against the NCTI basket.
The rename does not change the underlying mechanics of the inclusion: the same categories of foreign earnings of controlled foreign corporations are attributed to US shareholders on a current basis, with the same exemption for the qualified business asset investment (QBAI) return. For multinational groups with US ultimate parents, the most consequential change is the resetting of the effective tax rate, which interacts with both the corporate rate decision in the underlying foreign jurisdiction and the foreign tax credit position of the US parent.