Impact of GILTI and BEAT Tax Changes on U.S. Companies

This document is a guide that outlines the changes to the GILTI and BEAT tax rules and their implications for U.S. companies starting in 2026. It explains that GILTI, now referred to as Net CFC Tested Income (NCTI), has undergone significant modifications, including a reduction in the Section 250 deduction from 50% to 40%, which raises the effective tax rate. The guide details how the foreign tax credit allowance has increased from 80% to 90%, affecting the tax liabilities for U.S. corporations with foreign operations. Additionally, it discusses the BEAT tax, which targets U.S. corporations making large deductible payments to foreign affiliates, noting that the BEAT rate will rise to 10.5% instead of the previously anticipated 12.5%. The document provides practical tips for businesses, including modeling the impact of NCTI changes, reviewing foreign tax profiles, and assessing payment allocations. It emphasizes the importance of engaging tax advisors to navigate these changes effectively.