GILTI + FDII International Tax Calculator 2026

What Is GILTI and Why Does It Apply in 2026?

Global Intangible Low-Taxed Income (GILTI) is a US international tax regime created by the Tax Cuts and Jobs Act of 2017 and codified at Internal Revenue Code Section 951A. GILTI taxes US shareholders of Controlled Foreign Corporations (CFCs) annually on their share of CFC earnings exceeding a 10% deemed return on tangible foreign assets (Qualified Business Asset Investment, or QBAI). Practically, GILTI captures profits from low-tax jurisdictions on intangibles like patents, trademarks, and software — preventing US multinationals from shifting profits to tax havens. Source: IRS Form 8992 instructions.

For tax year 2026, US C corporations include their pro-rata share of net CFC tested income above the 10% QBAI return as GILTI. The corporation can then claim a § 250 deduction against this GILTI inclusion. Before tax year 2026 the deduction was 50%, producing an effective US tax rate of 10.5% (50% × 21%). For tax years beginning in 2026, the § 250 deduction drops to 37.5%, producing an effective US rate of 13.125% (62.5% × 21%) before foreign tax credits. An 80% foreign tax credit under § 960(d) further reduces the residual US tax.

FDII (Section 250): The Domestic Counterpart to GILTI

Foreign-Derived Intangible Income (FDII) is GILTI's mirror image — it incentivizes US C corporations to keep intangible-driven export profits in the United States rather than shift them offshore. FDII is the portion of a US C corporation's Deduction Eligible Income (DEI) that exceeds a 10% domestic QBAI return and is generated from sales of property or services to foreign customers for foreign use. FDII does not apply to pass-through entities (S corps, partnerships, LLCs) or individuals, except where a § 962 election is made.

• Pre-2026 FDII deduction: 37.5% of FDII, producing effective US tax rate of 13.125% (62.5% × 21%).
• 2026+ FDII deduction: 21.875% of FDII, producing effective US tax rate of 16.406% (78.125% × 21%) — a meaningful step-down that reduces the FDII benefit by roughly 25%.
• Taxable income limit: The combined § 250 deduction (GILTI + FDII) cannot exceed the corporation's taxable income before the deduction, which can completely eliminate the benefit if the corporation is in a loss year.

How to Use This GILTI + FDII Calculator for 2026 Tax Planning

For multinational US corporations, the GILTI vs FDII split often drives tax-efficient supply chain decisions. If foreign manufacturing produces high tested income but low QBAI, GILTI tax is high — pulling intellectual property back to the US to generate FDII can be tax-favorable. This calculator computes both regimes side by side using 2026 percentages: the GILTI inclusion (tested income minus 10% QBAI deemed return), the § 250 GILTI deduction (37.5% post-2026), the foreign tax credit (80% allowed against GILTI), and the FDII deduction (21.875% post-2026). The breakdown follows IRS Form 8992 (GILTI) and Form 8993 (§ 250 deduction) line-by-line.

Two important 2026 caveats: (1) the BEAT (Base Erosion Anti-Abuse Tax) under § 59A may override smaller benefits for corporations with significant base erosion payments, and (2) state taxation of GILTI varies — some states tax 100% of GILTI inclusion before federal deduction, while others conform fully or partially to the federal § 250 deduction. Consult a qualified international tax advisor before filing Form 1120 with Schedule J GILTI or FDII numbers. The OBBB Act 2025 retained the scheduled GILTI/FDII step-down rather than freezing the higher pre-2026 deductions. Last updated: May 3, 2026.