The U.S. international tax framework received a makeover thanks to H.R. 1, the One Big Beautiful Bill Act (OBBBA), passed in July 2025. With most of these provisions taking effect beginning with the 2026 tax year, modeling and structural decisions made now will directly influence compliance and tax positions in the first year of implementation.
“Modeling will help clients prepare for what the impact is going to be and understand what the outcome is based on the current system,” said Cory Perry, CPA, and International Tax Partner at Grant Thornton.
While H.R. 1 has opened the door for CPAs to play a more strategic role in navigating international tax complexity, no one is expected to already have all the answers. This is why AICPA ENGAGE 2026 brings the profession together to learn directly from the experts who help shape what comes next.
ENGAGE 2026, June 8–11, in Las Vegas and live online, blends leadership perspective with technical updates to give you the knowledge, perspective, and confidence to solve complex problems. Conference attendees can shape their experience with select tracks — the Tax Strategies Track offers strategies to match your clients’ evolving needs; regulatory updates; insights on the intersection of tax, technology, and financial planning; and so much more.
Perry will be leading the ENGAGE 2026 session, International Changes, focusing on the reforms ushered in by H.R. 1.
Whether you work with large multinational organizations or businesses with expanding cross-border footprints, the decisions made ahead of the 2026 tax season will have lasting implications for modeling, provisioning, compliance, and long‑term tax strategy.
“I would encourage CPAs to start early on getting an understanding because there were a lot of small changes to the international tax system, [including many] tweaks around the edges,” said Perry. “And they all interact in different ways.”
Understanding the move to NCTI
One of the most notable shifts within H.R. 1 is the transition from global intangible low-taxed income (GILTI) to net CFC tested income (NCTI).
GILTI was introduced under the Tax Cuts and Jobs Act of 2017 (TCJA) to curb the shifting of U.S.-company profits to tax-haven jurisdictions through controlled foreign corporations (CFCs). With a new moniker of NCTI, the law still discourages U.S. companies from shifting profits to foreign subsidiaries in low-tax jurisdictions. However, calculations no longer include qualified business asset investments (QBAI), which could increase the tax burden on capital-intensive companies.
Under GILTI, there is also no longer interest-expense allocation for foreign tax credit, which may have a significant effect on companies, said Perry.
“A lot of companies these days have high debt loads, particularly private-equity backed companies,” said Perry. “That debt, historically, prevented taxpayers from crediting a lot of foreign tax credits for GILTI purposes. The removal of that allocation-of-interest spend alone is significant.” This change allows for interest to be allocated to U.S.-sourced income, thereby increasing the ability to claim these credits.
GILTI wasn’t the only name changed. Foreign-derived intangible income (FDII) is now called foreign-derived deduction-eligible income (FDDEI) and requires a simpler calculation. FDDEI removes the “substance-based” hurdle that often penalized high-value tangible assets, and the deduction rate is now 33.34%, from FDII’s 37.5%. These changes, said Perry, generally benefit exportation of services, royalties, intellectual property sales, and product sales.
“The rate deduction isn’t quite as good as it was with the previous rules of [the TCJA], but they removed a couple of different things,” explained Perry. “You no longer have to allocate interest expense. You no longer have to allocate research and development to reduce the income that qualifies. You also don’t have a [reduction for tangible-asset investment].”
With the removal of those three components, most taxpayers will get a better deduction because there is more income that’s eligible. Perry suggests working with clients who may have opted not to take deductions since their introduction to the TCJA.
“There are changes that potentially make [FDDEI and NCTI] more favorable for many taxpayers than they were previously,” said Perry. “As with any transition between systems there is some opportunity to think about methods, timing, and other elements to plan to take the most advantage.”
Undoing unintended consequences of TCJA
For many taxpayers, the repeal of IRC Section 958(b)(4) under the TCJA created unexpected compliance obligations rather than targeting abusive structures — an issue H.R. 1 corrects by bringing Section 958(b)(4) back.
The rule states that a U.S. company should not be treated as owning a foreign company just because both are owned by the same foreign parent. Some U.S. taxpayers were unexpectedly required to file Form 5471, Information Return of U.S. Persons With Respect To Certain Foreign Corporations, and subject to potential implications from Subpart F or GILTI (now NCTI).
The return of Section 958(b)(4) signals boundaries around CFC ownership by stopping artificial CFC classification, reducing unnecessary filings, and lessening compliance risk while preserving targeted anti-abuse rules.
Perry sees the rule’s return as a correction from the TCJA “going further than it intended.”
“It’s a glitch what they did in [the TCJA]. They did not intend for the repeal of downward attribution to be as far-reaching as what they did in the [IRC],” explained Perry. “They wanted it to be limited in certain abusive situations … but instead of having a targeted repeal, they just struck the whole [provision] … and I think unintentionally created a lot of accidental CFCs.”
That’s how Perry describes most of the framework changes under H.R. 1 — tweaks, simplifications, fixes, and additions to address loopholes and glitches under the TCJA.
“There were a lot of corrections throughout [the new law], I would say, to achieve what were originally desired policy outcomes, but maybe not reality [of the TCJA],” said Perry.
Integrated planning starts before the filing season
Given the breadth of changes under H.R. 1, your most effective approach is a holistic one — one that evaluates how changes interact across the U.S. tax code and recognizes that international provisions do not operate in isolation. That analysis needs to begin now, ahead of next year’s tax season.
“I think looking holistically at the business, understanding what the overall impact is, and getting an understanding of that now is very important because it might be different than what you anticipate,” said Perry.
International tax mastery is a year-round journey and CPAs who invest now — in understanding the law, evaluating transition impacts, and sharpening their expertise — will be better positioned to advise clients with confidence.
You can find additional guidance, updates, resources, professional insights, and advocacy updates through the AICPA’s International Taxation Resource Center. The U.S. International Tax Certificate enhances your technical foundation and offers a comprehensive, self‑study path covering inbound and outbound transactions, core issues, foreign tax credits, GILTI, and advanced international issues.
H.R. 1 has expanded the role CPAs play in helping clients navigate international tax challenges, and while not every answer is settled yet, ENGAGE 2026 is where practitioners can learn, ask questions, and gain insight from those closest to the change.
ENGAGE 2026, and sessions like International Changes, provide the insight needed to turn global tax change into strategic opportunity.