GILTI + FDII International Tax Calculator 2026
Calculate the 2026 US tax on Global Intangible Low-Taxed Income (GILTI, § 951A) and the Foreign-Derived Intangible Income (FDII, § 250) deduction, including QBAI deemed return, the post-OBBB 2026 deduction haircut, and 80% foreign tax credit. Free, private, runs in your browser.
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Source: IRS Form 8992 instructions (GILTI) + IRS Form 8993 instructions (§ 250 deduction) + IRC § 951A and § 250 (irs.gov). Last updated: May 3, 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.
Frequently Asked Questions
What is GILTI tax in 2026?
GILTI (Global Intangible Low-Taxed Income) under IRC § 951A is the annual US tax on a US shareholder's share of CFC tested income exceeding a 10% deemed return on Qualified Business Asset Investment (QBAI). For tax year 2026, the § 250 deduction reduces from 50% to 37.5%, producing an effective US tax rate of 13.125% on GILTI before foreign tax credits.
What is the FDII deduction for 2026?
FDII (Foreign-Derived Intangible Income) under IRC § 250 lets US C corporations deduct a portion of their export-driven intangible income. Pre-2026 the deduction was 37.5% (effective rate 13.125%); for tax years 2026 and later it drops to 21.875% (effective rate 16.406%). FDII does not apply to pass-throughs or individuals without a § 962 election.
How does the 80% foreign tax credit work for GILTI?
IRC § 960(d) allows a US C corporation to claim 80% of the foreign income tax paid by its CFCs as a credit against the US tax on GILTI. The 20% haircut is the cost of the GILTI regime. The FTC is computed on a separate GILTI basket with no carryback or carryforward, so unused GILTI FTC expires the year it arises.
Who has to file Form 8992 for GILTI?
Every US shareholder of one or more CFCs must file Form 8992 (U.S. Shareholder Calculation of Global Intangible Low-Taxed Income) to compute the GILTI inclusion. US C corporations also file Form 8993 to claim the § 250 deduction for GILTI and FDII.
What is QBAI and how does it reduce GILTI?
QBAI (Qualified Business Asset Investment) is the average tax-adjusted basis of CFC depreciable tangible property. The 10% deemed return on QBAI is subtracted from net CFC tested income to arrive at the GILTI inclusion. So a CFC with high tangible assets (factories, equipment) has lower GILTI than one operating mainly with intangibles.
Can individuals claim the § 250 deduction on GILTI?
No, not directly. Individuals and pass-through entities (S corps, partnerships) include GILTI in ordinary income at marginal rates up to 37% with no § 250 deduction. To unlock the 37.5% deduction (and 80% FTC), an individual can make a § 962 election to be taxed as a domestic corporation on the GILTI inclusion, but the elected amount is then re-taxed at qualified dividend rates when distributed.