GILTI and FDDEI Fundamentals (Formerly FDII)

Summary

This practice note explains the fundamentals of the global intangible low-taxed income (GILTI) tax regime, as revised and renamed net CFC tested income for taxable years beginning after December 31, 2025, and the FDII regime, which was renamed foreign-derived deduction eligible income (FDDEI) under the One Big Beautiful Bill Act (OBBBA), Pub. L. No. 119-21, 139 Stat. 72 (July 4, 2025). Both GILTI and FDII were introduced by the Tax Cuts and Jobs Act of 2017. Section 14201 added I.R.C. Section 951A, and Section 14202 added I.R.C. Section 250. See Pub. L. No. 115-97, Sections 14201, 14202, 131 Stat. 2054, 2208, 2213 (2017). Both regimes were substantially revised by OBBBA.. Effective for taxable years beginning after December 31, 2025, OBBBA eliminated the former QBAI and net deemed tangible income return reduction in the Section 951A computation, renamed the Section 951A inclusion as net CFC tested income, modified the Section 250 deduction percentages, and revised the FDII rules by ...