Title 26 — Internal Revenue Code
Part VIII · Chapter 1 — Normal Taxes and Surtaxes
§ 250. Foreign-derived deduction eligible income and net CFC tested income
Statutory text
Allowance of deduction
In general
In the case of a domestic corporation for any taxable year, there shall be allowed as a deduction an amount equal to the sum of—
33.34 percent of the foreign-derived deduction eligible income of such domestic corporation for such taxable year, plus
40 percent of—
the net CFC tested income amount (if any) which is included in the gross income of such domestic corporation under section 951A for such taxable year, and
the amount treated as a dividend received by such corporation under section 78 which is attributable to the amount described in clause (i).
Limitation based on taxable income
In general
If, for any taxable year—
the sum of the foreign-derived deduction eligible income and the net CFC tested income amount otherwise taken into account by the domestic corporation under paragraph (1), exceeds
the taxable income of the domestic corporation (determined without regard to this section),
then the amount of the foreign-derived deduction eligible income and the net CFC tested income amount so taken into account shall be reduced as provided in subparagraph (B).
Reduction
For purposes of subparagraph (A)—
foreign-derived deduction eligible income shall be reduced by an amount which bears the same ratio to the excess described in subparagraph (A) as such foreign-derived deduction eligible income bears to the sum described in subparagraph (A)(i), and
the net CFC tested income amount shall be reduced by the remainder of such excess.
Foreign-derived deduction eligible income
For purposes of this section—
Foreign-derived deduction eligible income
The term “foreign-derived deduction eligible income” means, with respect to any taxpayer for any taxable year, any deduction eligible income of such taxpayer which is derived in connection with—
property—
which is sold by the taxpayer to any person who is not a United States person, and
which the taxpayer establishes to the satisfaction of the Secretary is for a foreign use, or
services provided by the taxpayer which the taxpayer establishes to the satisfaction of the Secretary are provided to any person, or with respect to property, not located within the United States.
Rules relating to foreign use property or services
For purposes of this subsection—
Foreign use
The term “foreign use” means any use, consumption, or disposition which is not within the United States.
Property or services provided to domestic intermediaries
Property
If a taxpayer sells property to another person (other than a related party) for further manufacture or other modification within the United States, such property shall not be treated as sold for a foreign use even if such other person subsequently uses such property for a foreign use.
Services
If a taxpayer provides services to another person (other than a related party) located within the United States, such services shall not be treated as described in paragraph (1)(B) even if such other person uses such services in providing services which are so described.
Special rules with respect to related party transactions
Sales to related parties
If property is sold to a related party who is not a United States person, such sale shall not be treated as for a foreign use unless—
such property is ultimately sold by a related party, or used by a related party in connection with property which is sold or the provision of services, to another person who is an unrelated party who is not a United States person, and
the taxpayer establishes to the satisfaction of the Secretary that such property is for a foreign use.
For purposes of this clause, a sale of property shall be treated as a sale of each of the components thereof.
Service provided to related parties
If a service is provided to a related party who is not located in the United States, such service shall not be treated described 1 in subparagraph (A)(ii) 2 unless the taxpayer established to the satisfaction of the Secretary that such service is not substantially similar to services provided by such related party to persons located within the United States.
Related party
For purposes of this paragraph, the term “related party” means any member of an affiliated group as defined in section 1504(a), determined—
by substituting “more than 50 percent” for “at least 80 percent” each place it appears, and
without regard to paragraphs (2) and (3) of section 1504(b).
Any person (other than a corporation) shall be treated as a member of such group if such person is controlled by members of such group (including any entity treated as a member of such group by reason of this sentence) or controls any such member. For purposes of the preceding sentence, control shall be determined under the rules of section 954(d)(3).
Sold
For purposes of this subsection (other than paragraph (3)(A)(i)(VII)), the terms “sold”, “sells”, and “sale” shall include any lease, license, exchange, or other disposition.
Deduction eligible income
In general
The term “deduction eligible income” means, with respect to any domestic corporation, the excess (if any) of—
gross income of such corporation determined without regard to—
any amount included in the gross income of such corporation under section 951(a)(1),
the net CFC tested income included in the gross income of such corporation under section 951A,
any financial services income (as defined in section 904(d)(2)(D)) of such corporation,
any dividend received from a corporation which is a controlled foreign corporation of such domestic corporation,
any domestic oil and gas extraction income of such corporation,
any foreign branch income (as defined in section 904(d)(2)(J)), and
except as otherwise provided by the Secretary, any income and gain from the sale or other disposition (including pursuant to the deemed sale or other deemed disposition or a transaction subject to section 367(d)) of—
intangible property (as defined in section 367(d)(4)), and
any other property of a type that is subject to depreciation, amortization, or depletion by the seller, over
expenses and deductions (including taxes), other than interest expense and research or experimental expenditures, properly allocable to such gross income.
Domestic oil and gas extraction income
For purposes of subparagraph (A), the term “domestic oil and gas extraction income” means income described in section 907(c)(1), determined by substituting “within the United States” for “without the United States”.
Regulations
The Secretary shall prescribe such regulations or other guidance as may be necessary or appropriate to carry out the provisions of this section.
Footnotes
Legislative history
Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.
Pub. L. 115–97 title I § 14202(a) · 131 Stat. 2054
Enacted · 26 U.S.C. § 250
Added Pub. L. 115–97, title I, § 14202(a), Dec. 22, 2017, 131 Stat. 2213
Source evidence
Code source credit
Added Pub. L. 115–97, title I, § 14202(a), Dec. 22, 2017, 131 Stat. 2213Enacted provision · exact public law section
(a) In General.— Part VIII of subchapter B of chapter 1 is amended by adding at the end the following new section: “SEC. 250. FOREIGN-DERIVED INTANGIBLE INCOME AND GLOBAL INTANGIBLE LOW-TAXED INCOME. “(a) Allowance of Deduction.— “(1) In general.— In the case of a domestic corporation for any taxable year, there shall be allowed as a deduction an amount equal to the sum of— “(A) 37.5 percent of the foreign-derived intangible income of such domestic corporation for such taxable year, plus “(B) 50 percent of— “(i) the global intangible low-taxed income amount (if any) which is included in the gross income of such domestic corporation under section 951A for such taxable year, and “(ii) the amount treated as a dividend received by such corporation under section 78 which is attributable to the amount described in clause (i). “(2) Limitation based on taxable income.— “(A) In general.— If, for any taxable year— “(i) the sum of the foreign-derived intangible income and the global intangible low-taxed income amount otherwise taken into account by the domestic corporation under paragraph (1), exceeds “(ii) the taxable income of the domestic corporation (determined without regard to this section), then the amount of the foreign-derived intangible income and the global intangible low-taxed income amount so taken into account shall be reduced as provided in subparagraph (B). “(B) Reduction.— For purposes of subparagraph (A)— “(i) foreign-derived intangible income shall be reduced by an amount which bears the same ratio to the excess described in subparagraph (A) as such foreign-derived intangible income bears to the sum described in subparagraph (A)(i), and “(ii) the global intangible low-taxed income amount shall be reduced by the remainder of such excess. “(3) Reduction in deduction for taxable years after 2025.— In the case of any taxable year beginning after December 31, 2025, paragraph (1) shall be applied by substituting— “(A) ‘21.875 percent’ for ‘37.5 percent’ in subparagraph (A), and “(B) ‘37.5 percent’ for ‘50 percent’ in subparagraph (B). “(b) Foreign-derived Intangible Income.— For purposes of this section— “(1) In general.— The foreign-derived intangible income of any domestic corporation is the amount which bears the same ratio to the deemed intangible income of such corporation as— “(A) the foreign-derived deduction eligible income of such corporation, bears to “(B) the deduction eligible income of such corporation. “(2) Deemed intangible income.— For purposes of this subsection— “(A) In general.— The term ‘deemed intangible income’ means the excess (if any) of— “(i) the deduction eligible income of the domestic corporation, over “(ii) the deemed tangible income return of the corporation. “(B) Deemed tangible income return.— The term ‘deemed tangible income return’ means, with respect to any corporation, an amount equal to 10 percent of the corporation’s qualified business asset investment (as defined in section 951A(d), determined by substituting ‘deduction eligible income’ for ‘tested income’ in paragraph (2) thereof and without regard to whether the corporation is a controlled foreign corporation). “(3) Deduction eligible income.— “(A) In general.— The term ‘deduction eligible income’ means, with respect to any domestic corporation, the excess (if any) of— “(i) gross income of such corporation determined without regard to— “(I) any amount included in the gross income of such corporation under section 951(a)(1), “(II) the global intangible low-taxed income included in the gross income of such corporation under section 951A, “(III) any financial services income (as defined in section 904(d)(2)(D)) of such corporation, “(IV) any dividend received from a corporation which is a controlled foreign corporation of such domestic corporation, “(V) any domestic oil and gas extraction income of such corporation, and “(VI) any foreign branch income (as defined in section 904(d)(2)(J)), over “(ii) the deductions (including taxes) properly allocable to such gross income. “(B) Domestic oil and gas extraction income.— For purposes of subparagraph (A), the term ‘domestic oil and gas extraction income’ means income described in section 907(c)(1), determined by substituting ‘within the United States’ for ‘without the United States’. “(4) Foreign-derived deduction eligible income.— The term ‘foreign-derived deduction eligible income’ means, with respect to any taxpayer for any taxable year, any deduction eligible income of such taxpayer which is derived in connection with— “(A) property— “(i) which is sold by the taxpayer to any person who is not a United States person, and “(ii) which the taxpayer establishes to the satisfaction of the Secretary is for a foreign use, or “(B) services provided by the taxpayer which the taxpayer establishes to the satisfaction of the Secretary are provided to any person, or with respect to property, not located within the United States. “(5) Rules relating to foreign use property or services.— For purposes of this subsection— “(A) Foreign use.— The term ‘foreign use’ means any use, consumption, or disposition which is not within the United States. “(B) Property or services provided to domestic intermediaries.— “(i) Property.— If a taxpayer sells property to another person (other than a related party) for further manufacture or other modification within the United States, such property shall not be treated as sold for a foreign use even if such other person subsequently uses such property for a foreign use. “(ii) Services.— If a taxpayer provides services to another person (other than a related party) located within the United States, such services shall not be treated as described in paragraph (4)(B) even if such other person uses such services in providing services which are so described. “(C) Special rules with respect to related party transactions.— “(i) Sales to related parties.— If property is sold to a related party who is not a United States person, such sale shall not be treated as for a foreign use unless— “(I) such property is ultimately sold by a related party, or used by a related party in connection with property which is sold or the provision of services, to another person who is an unrelated party who is not a United States person, and “(II) the taxpayer establishes to the satisfaction of the Secretary that such property is for a foreign use. For purposes of this clause, a sale of property shall be treated as a sale of each of the components thereof. “(ii) Service provided to related parties.— If a service is provided to a related party who is not located in the United States, such service shall not be treated described in subparagraph (A)(ii) unless the taxpayer established to the satisfaction of the Secretary that such service is not substantially similar to services provided by such related party to persons located within the United States. “(D) Related party.— For purposes of this paragraph, the term ‘related party’ means any member of an affiliated group as defined in section 1504(a), determined— “(i) by substituting ‘more than 50 percent’ for ‘at least 80 percent’ each place it appears, and “(ii) without regard to paragraphs (2) and (3) of section 1504(b). Any person (other than a corporation) shall be treated as a member of such group if such person is controlled by members of such group (including any entity treated as a member of such group by reason of this sentence) or controls any such member. For purposes of the preceding sentence, control shall be determined under the rules of section 954(d)(3). “(E) Sold.— For purposes of this subsection, the terms ‘sold’, ‘sells’, and ‘sale’ shall include any lease, license, exchange, or other disposition. “(c) Regulations.— The Secretary shall prescribe such regulations or other guidance as may be necessary or appropriate to carry out the provisions of this section.” .Pub. L. 119–21 § 70323(b)(2)(C)(i) · 139 Stat. 204-206
Substituted · 26 U.S.C. § 250
Pub. L. 119–21, § 70323(b)(2)(C)(i), substituted “Foreign-derived deduction eligible” for “Foreign-derived intangible” in section catchline
Unresolved: Pub. L. 119–21 was not found in the local Statutes at Large index.
Source evidence
Code amendment note
Pub. L. 119–21, § 70323(b)(2)(C)(i), substituted “Foreign-derived deduction eligible” for “Foreign-derived intangible” in section catchline.Effective date note
Pub. L. 119–21, title VII, § 70321(b), July 4, 2025, 139 Stat. 204, provided that: “The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2025.” Pub. L. 119–21, title VII, § 70322(a)(3), July 4, 2025, 139 Stat. 204, provided that: “The amendments made by this subsection [amending this section] shall apply to sales or other dispositions (including pursuant to deemed sales or other deemed dispositions or a transaction subject to section 367(d) of the Internal Revenue Code of 1986) occurring after June 16, 2025.” Pub. L. 119–21, title VII, § 70322(b)(2), July 4, 2025, 139 Stat. 205, provided that: “The amendment made by this subsection [amending this section] shall apply to taxable years beginning after December 31, 2025.” Amendment by section 70323(a)(3)(A)(i), (ii), (b)(1)–(2)(C)(i) of Pub. L. 119–21 applicable to taxable years beginning after Dec. 31, 2025, see section 70323(c) of Pub. L. 119–21, set out as a note under section 172 of this title.Pub. L. 119–21 § 70323(a)(3)(A)(ii) · 139 Stat. 204-206
Substituted · 26 U.S.C. § 250
Pub. L. 119–21, § 70323(a)(3)(A)(ii), substituted “net CFC tested income” for “global intangible low-taxed income” in section catchline
Unresolved: Pub. L. 119–21 was not found in the local Statutes at Large index.
Target inherited from the preceding amendment note.
Source evidence
Code amendment note
Pub. L. 119–21, § 70323(a)(3)(A)(ii), substituted “net CFC tested income” for “global intangible low-taxed income” in section catchline.Effective date note
Pub. L. 119–21, title VII, § 70321(b), July 4, 2025, 139 Stat. 204, provided that: “The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2025.” Pub. L. 119–21, title VII, § 70322(a)(3), July 4, 2025, 139 Stat. 204, provided that: “The amendments made by this subsection [amending this section] shall apply to sales or other dispositions (including pursuant to deemed sales or other deemed dispositions or a transaction subject to section 367(d) of the Internal Revenue Code of 1986) occurring after June 16, 2025.” Pub. L. 119–21, title VII, § 70322(b)(2), July 4, 2025, 139 Stat. 205, provided that: “The amendment made by this subsection [amending this section] shall apply to taxable years beginning after December 31, 2025.” Amendment by section 70323(a)(3)(A)(i), (ii), (b)(1)–(2)(C)(i) of Pub. L. 119–21 applicable to taxable years beginning after Dec. 31, 2025, see section 70323(c) of Pub. L. 119–21, set out as a note under section 172 of this title.Pub. L. 119–21 § 70323(b)(1) · 139 Stat. 204-206
Substituted · 26 U.S.C. § 250(a)(1)(A)
Pub. L. 119–21, § 70323(b)(1), substituted “foreign-derived deduction eligible income” for “foreign-derived intangible income”
Unresolved: Pub. L. 119–21 was not found in the local Statutes at Large index.
Source evidence
Code amendment note
Subsec. (a)(1)(A). Pub. L. 119–21, § 70323(b)(1), substituted “foreign-derived deduction eligible income” for “foreign-derived intangible income”.Effective date note
Pub. L. 119–21, title VII, § 70321(b), July 4, 2025, 139 Stat. 204, provided that: “The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2025.” Pub. L. 119–21, title VII, § 70322(a)(3), July 4, 2025, 139 Stat. 204, provided that: “The amendments made by this subsection [amending this section] shall apply to sales or other dispositions (including pursuant to deemed sales or other deemed dispositions or a transaction subject to section 367(d) of the Internal Revenue Code of 1986) occurring after June 16, 2025.” Pub. L. 119–21, title VII, § 70322(b)(2), July 4, 2025, 139 Stat. 205, provided that: “The amendment made by this subsection [amending this section] shall apply to taxable years beginning after December 31, 2025.” Amendment by section 70323(a)(3)(A)(i), (ii), (b)(1)–(2)(C)(i) of Pub. L. 119–21 applicable to taxable years beginning after Dec. 31, 2025, see section 70323(c) of Pub. L. 119–21, set out as a note under section 172 of this title.Pub. L. 119–21 § 70321(a)(1) · 139 Stat. 204-206
Substituted · 26 U.S.C. § 250(a)(1)(A)
Pub. L. 119–21, § 70321(a)(1), substituted “33.34 percent” for “37.5 percent”
Unresolved: Pub. L. 119–21 was not found in the local Statutes at Large index.
Target inherited from the preceding amendment note.
Source evidence
Code amendment note
Pub. L. 119–21, § 70321(a)(1), substituted “33.34 percent” for “37.5 percent”.Effective date note
Pub. L. 119–21, title VII, § 70321(b), July 4, 2025, 139 Stat. 204, provided that: “The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2025.” Pub. L. 119–21, title VII, § 70322(a)(3), July 4, 2025, 139 Stat. 204, provided that: “The amendments made by this subsection [amending this section] shall apply to sales or other dispositions (including pursuant to deemed sales or other deemed dispositions or a transaction subject to section 367(d) of the Internal Revenue Code of 1986) occurring after June 16, 2025.” Pub. L. 119–21, title VII, § 70322(b)(2), July 4, 2025, 139 Stat. 205, provided that: “The amendment made by this subsection [amending this section] shall apply to taxable years beginning after December 31, 2025.” Amendment by section 70323(a)(3)(A)(i), (ii), (b)(1)–(2)(C)(i) of Pub. L. 119–21 applicable to taxable years beginning after Dec. 31, 2025, see section 70323(c) of Pub. L. 119–21, set out as a note under section 172 of this title.Pub. L. 119–21 § 70321(a)(2) · 139 Stat. 204-206
Substituted · 26 U.S.C. § 250(a)(1)(B)
Pub. L. 119–21, § 70321(a)(2), substituted “40 percent” for “50 percent” in introductory provisions
Unresolved: Pub. L. 119–21 was not found in the local Statutes at Large index.
Source evidence
Code amendment note
Subsec. (a)(1)(B). Pub. L. 119–21, § 70321(a)(2), substituted “40 percent” for “50 percent” in introductory provisions.Effective date note
Pub. L. 119–21, title VII, § 70321(b), July 4, 2025, 139 Stat. 204, provided that: “The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2025.” Pub. L. 119–21, title VII, § 70322(a)(3), July 4, 2025, 139 Stat. 204, provided that: “The amendments made by this subsection [amending this section] shall apply to sales or other dispositions (including pursuant to deemed sales or other deemed dispositions or a transaction subject to section 367(d) of the Internal Revenue Code of 1986) occurring after June 16, 2025.” Pub. L. 119–21, title VII, § 70322(b)(2), July 4, 2025, 139 Stat. 205, provided that: “The amendment made by this subsection [amending this section] shall apply to taxable years beginning after December 31, 2025.” Amendment by section 70323(a)(3)(A)(i), (ii), (b)(1)–(2)(C)(i) of Pub. L. 119–21 applicable to taxable years beginning after Dec. 31, 2025, see section 70323(c) of Pub. L. 119–21, set out as a note under section 172 of this title.Pub. L. 119–21 § 70323(a)(3)(A)(i) · 139 Stat. 204-206
Substituted · 26 U.S.C. § 250(a)(1)(B)(i)
Pub. L. 119–21, § 70323(a)(3)(A)(i), substituted “net CFC tested income” for “global intangible low-taxed income”
Unresolved: Pub. L. 119–21 was not found in the local Statutes at Large index.
Source evidence
Code amendment note
Subsec. (a)(1)(B)(i). Pub. L. 119–21, § 70323(a)(3)(A)(i), substituted “net CFC tested income” for “global intangible low-taxed income”.Effective date note
Pub. L. 119–21, title VII, § 70321(b), July 4, 2025, 139 Stat. 204, provided that: “The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2025.” Pub. L. 119–21, title VII, § 70322(a)(3), July 4, 2025, 139 Stat. 204, provided that: “The amendments made by this subsection [amending this section] shall apply to sales or other dispositions (including pursuant to deemed sales or other deemed dispositions or a transaction subject to section 367(d) of the Internal Revenue Code of 1986) occurring after June 16, 2025.” Pub. L. 119–21, title VII, § 70322(b)(2), July 4, 2025, 139 Stat. 205, provided that: “The amendment made by this subsection [amending this section] shall apply to taxable years beginning after December 31, 2025.” Amendment by section 70323(a)(3)(A)(i), (ii), (b)(1)–(2)(C)(i) of Pub. L. 119–21 applicable to taxable years beginning after Dec. 31, 2025, see section 70323(c) of Pub. L. 119–21, set out as a note under section 172 of this title.Pub. L. 119–21 § 70323(b)(2)(A) · 139 Stat. 204-206
Substituted · 26 U.S.C. § 250(a)(2)
Pub. L. 119–21, § 70323(b)(2)(A), substituted “foreign-derived deduction eligible income” for “foreign-derived intangible income” in cl. (i) and concluding provisions
Unresolved: Pub. L. 119–21 was not found in the local Statutes at Large index.
Source evidence
Code amendment note
Subsec. (a)(2). Pub. L. 119–21, § 70323(b)(2)(A), substituted “foreign-derived deduction eligible income” for “foreign-derived intangible income” in cl. (i) and concluding provisions.Effective date note
Pub. L. 119–21, title VII, § 70321(b), July 4, 2025, 139 Stat. 204, provided that: “The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2025.” Pub. L. 119–21, title VII, § 70322(a)(3), July 4, 2025, 139 Stat. 204, provided that: “The amendments made by this subsection [amending this section] shall apply to sales or other dispositions (including pursuant to deemed sales or other deemed dispositions or a transaction subject to section 367(d) of the Internal Revenue Code of 1986) occurring after June 16, 2025.” Pub. L. 119–21, title VII, § 70322(b)(2), July 4, 2025, 139 Stat. 205, provided that: “The amendment made by this subsection [amending this section] shall apply to taxable years beginning after December 31, 2025.” Amendment by section 70323(a)(3)(A)(i), (ii), (b)(1)–(2)(C)(i) of Pub. L. 119–21 applicable to taxable years beginning after Dec. 31, 2025, see section 70323(c) of Pub. L. 119–21, set out as a note under section 172 of this title.Pub. L. 119–21 § 70323(a)(3)(A)(i) · 139 Stat. 204-206
Substituted · 26 U.S.C. § 250(a)(2)
Pub. L. 119–21, § 70323(a)(3)(A)(i), substituted “net CFC tested income” for “global intangible low-taxed income” in cl. (i) and concluding provisions
Unresolved: Pub. L. 119–21 was not found in the local Statutes at Large index.
Target inherited from the preceding amendment note.
Source evidence
Code amendment note
Pub. L. 119–21, § 70323(a)(3)(A)(i), substituted “net CFC tested income” for “global intangible low-taxed income” in cl. (i) and concluding provisions.Effective date note
Pub. L. 119–21, title VII, § 70321(b), July 4, 2025, 139 Stat. 204, provided that: “The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2025.” Pub. L. 119–21, title VII, § 70322(a)(3), July 4, 2025, 139 Stat. 204, provided that: “The amendments made by this subsection [amending this section] shall apply to sales or other dispositions (including pursuant to deemed sales or other deemed dispositions or a transaction subject to section 367(d) of the Internal Revenue Code of 1986) occurring after June 16, 2025.” Pub. L. 119–21, title VII, § 70322(b)(2), July 4, 2025, 139 Stat. 205, provided that: “The amendment made by this subsection [amending this section] shall apply to taxable years beginning after December 31, 2025.” Amendment by section 70323(a)(3)(A)(i), (ii), (b)(1)–(2)(C)(i) of Pub. L. 119–21 applicable to taxable years beginning after Dec. 31, 2025, see section 70323(c) of Pub. L. 119–21, set out as a note under section 172 of this title.Pub. L. 119–21 § 70321(a)(3) · 139 Stat. 204-206
Substituted · 26 U.S.C. § 250(a)(3)
Pub. L. 119–21, § 70321(a)(3), struck out par. (3). Text read as follows: “In the case of any taxable year beginning after December 31, 2025, paragraph (1) shall be applied by substituting—
Unresolved: Pub. L. 119–21 was not found in the local Statutes at Large index.
Source evidence
Code amendment note
Subsec. (a)(3). Pub. L. 119–21, § 70321(a)(3), struck out par. (3). Text read as follows: “In the case of any taxable year beginning after December 31, 2025, paragraph (1) shall be applied by substituting—“(A) ‘21.875 percent’ for ‘37.5 percent’ in subparagraph (A), and “(B) ‘37.5 percent’ for ‘50 percent’ in subparagraph (B).”
Effective date note
Pub. L. 119–21, title VII, § 70321(b), July 4, 2025, 139 Stat. 204, provided that: “The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2025.” Pub. L. 119–21, title VII, § 70322(a)(3), July 4, 2025, 139 Stat. 204, provided that: “The amendments made by this subsection [amending this section] shall apply to sales or other dispositions (including pursuant to deemed sales or other deemed dispositions or a transaction subject to section 367(d) of the Internal Revenue Code of 1986) occurring after June 16, 2025.” Pub. L. 119–21, title VII, § 70322(b)(2), July 4, 2025, 139 Stat. 205, provided that: “The amendment made by this subsection [amending this section] shall apply to taxable years beginning after December 31, 2025.” Amendment by section 70323(a)(3)(A)(i), (ii), (b)(1)–(2)(C)(i) of Pub. L. 119–21 applicable to taxable years beginning after Dec. 31, 2025, see section 70323(c) of Pub. L. 119–21, set out as a note under section 172 of this title.Pub. L. 119–21 § 70323(b)(2)(B)(iv) · 139 Stat. 204-206
Substituted · 26 U.S.C. § 250(b)
Pub. L. 119–21, § 70323(b)(2)(B)(iv), substituted “deduction eligible” for “intangible” in heading
Unresolved: Pub. L. 119–21 was not found in the local Statutes at Large index.
Source evidence
Code amendment note
Subsec. (b). Pub. L. 119–21, § 70323(b)(2)(B)(iv), substituted “deduction eligible” for “intangible” in heading.Effective date note
Pub. L. 119–21, title VII, § 70321(b), July 4, 2025, 139 Stat. 204, provided that: “The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2025.” Pub. L. 119–21, title VII, § 70322(a)(3), July 4, 2025, 139 Stat. 204, provided that: “The amendments made by this subsection [amending this section] shall apply to sales or other dispositions (including pursuant to deemed sales or other deemed dispositions or a transaction subject to section 367(d) of the Internal Revenue Code of 1986) occurring after June 16, 2025.” Pub. L. 119–21, title VII, § 70322(b)(2), July 4, 2025, 139 Stat. 205, provided that: “The amendment made by this subsection [amending this section] shall apply to taxable years beginning after December 31, 2025.” Amendment by section 70323(a)(3)(A)(i), (ii), (b)(1)–(2)(C)(i) of Pub. L. 119–21 applicable to taxable years beginning after Dec. 31, 2025, see section 70323(c) of Pub. L. 119–21, set out as a note under section 172 of this title.Pub. L. 119–21 § 70323(b)(2)(B) · 139 Stat. 204-206
Struck · 26 U.S.C. § 250(b)
Pub. L. 119–21, § 70323(b)(2)(B), struck out pars. (1) and (2)
Redesignated · 26 U.S.C. § 250(b)
Pub. L. 119–21, § 70323(b)(2)(B), redesignated former pars. (4) and (5) as (1) and (2), respectively
Substituted · 26 U.S.C. § 250(b)
Pub. L. 119–21, § 70323(b)(2)(B), substituted “paragraph (1)(B)” for “paragraph (4)(B)” in par. (2)(B)(ii). Prior to amendment, pars. (1) and (2) defined “foreign-derived intangible income” for purposes of this section and “deemed intangible income” and “deemed tangible income return” for purposes of subsec. (b), respectively
Unresolved: Pub. L. 119–21 was not found in the local Statutes at Large index.
Target inherited from the preceding amendment note.
Source evidence
Code amendment note
Pub. L. 119–21, § 70323(b)(2)(B), struck out pars. (1) and (2), redesignated former pars. (4) and (5) as (1) and (2), respectively, and substituted “paragraph (1)(B)” for “paragraph (4)(B)” in par. (2)(B)(ii). Prior to amendment, pars. (1) and (2) defined “foreign-derived intangible income” for purposes of this section and “deemed intangible income” and “deemed tangible income return” for purposes of subsec. (b), respectively.Effective date note
Pub. L. 119–21, title VII, § 70321(b), July 4, 2025, 139 Stat. 204, provided that: “The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2025.” Pub. L. 119–21, title VII, § 70322(a)(3), July 4, 2025, 139 Stat. 204, provided that: “The amendments made by this subsection [amending this section] shall apply to sales or other dispositions (including pursuant to deemed sales or other deemed dispositions or a transaction subject to section 367(d) of the Internal Revenue Code of 1986) occurring after June 16, 2025.” Pub. L. 119–21, title VII, § 70322(b)(2), July 4, 2025, 139 Stat. 205, provided that: “The amendment made by this subsection [amending this section] shall apply to taxable years beginning after December 31, 2025.” Amendment by section 70323(a)(3)(A)(i), (ii), (b)(1)–(2)(C)(i) of Pub. L. 119–21 applicable to taxable years beginning after Dec. 31, 2025, see section 70323(c) of Pub. L. 119–21, set out as a note under section 172 of this title.Pub. L. 119–21 § 70323(a)(3)(A)(i) · 139 Stat. 204-206
Substituted · 26 U.S.C. § 250(b)(3)(A)(i)(II)
Pub. L. 119–21, § 70323(a)(3)(A)(i), substituted “net CFC tested income” for “global intangible low-taxed income”
Unresolved: Pub. L. 119–21 was not found in the local Statutes at Large index.
Source evidence
Code amendment note
Subsec. (b)(3)(A)(i)(II). Pub. L. 119–21, § 70323(a)(3)(A)(i), substituted “net CFC tested income” for “global intangible low-taxed income”.Effective date note
Pub. L. 119–21, title VII, § 70321(b), July 4, 2025, 139 Stat. 204, provided that: “The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2025.” Pub. L. 119–21, title VII, § 70322(a)(3), July 4, 2025, 139 Stat. 204, provided that: “The amendments made by this subsection [amending this section] shall apply to sales or other dispositions (including pursuant to deemed sales or other deemed dispositions or a transaction subject to section 367(d) of the Internal Revenue Code of 1986) occurring after June 16, 2025.” Pub. L. 119–21, title VII, § 70322(b)(2), July 4, 2025, 139 Stat. 205, provided that: “The amendment made by this subsection [amending this section] shall apply to taxable years beginning after December 31, 2025.” Amendment by section 70323(a)(3)(A)(i), (ii), (b)(1)–(2)(C)(i) of Pub. L. 119–21 applicable to taxable years beginning after Dec. 31, 2025, see section 70323(c) of Pub. L. 119–21, set out as a note under section 172 of this title.Pub. L. 119–21 § 70322(a)(1) · 139 Stat. 204-206
Added · 26 U.S.C. § 250(b)(3)(A)(i)(VII)
Pub. L. 119–21, § 70322(a)(1), added subcl. (VII)
Unresolved: Pub. L. 119–21 was not found in the local Statutes at Large index.
Source evidence
Code amendment note
Subsec. (b)(3)(A)(i)(VII). Pub. L. 119–21, § 70322(a)(1), added subcl. (VII).Effective date note
Pub. L. 119–21, title VII, § 70321(b), July 4, 2025, 139 Stat. 204, provided that: “The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2025.” Pub. L. 119–21, title VII, § 70322(a)(3), July 4, 2025, 139 Stat. 204, provided that: “The amendments made by this subsection [amending this section] shall apply to sales or other dispositions (including pursuant to deemed sales or other deemed dispositions or a transaction subject to section 367(d) of the Internal Revenue Code of 1986) occurring after June 16, 2025.” Pub. L. 119–21, title VII, § 70322(b)(2), July 4, 2025, 139 Stat. 205, provided that: “The amendment made by this subsection [amending this section] shall apply to taxable years beginning after December 31, 2025.” Amendment by section 70323(a)(3)(A)(i), (ii), (b)(1)–(2)(C)(i) of Pub. L. 119–21 applicable to taxable years beginning after Dec. 31, 2025, see section 70323(c) of Pub. L. 119–21, set out as a note under section 172 of this title.Pub. L. 119–21 § 70322(b)(1) · 139 Stat. 204-206
Amended · 26 U.S.C. § 250(b)(3)(A)(ii)
Pub. L. 119–21, § 70322(b)(1), amended cl. (ii) generally. Prior to amendment, cl. (ii) read as follows: “the deductions (including taxes) properly allocable to such gross income.”
Unresolved: Pub. L. 119–21 was not found in the local Statutes at Large index.
Source evidence
Code amendment note
Subsec. (b)(3)(A)(ii). Pub. L. 119–21, § 70322(b)(1), amended cl. (ii) generally. Prior to amendment, cl. (ii) read as follows: “the deductions (including taxes) properly allocable to such gross income.”Effective date note
Pub. L. 119–21, title VII, § 70321(b), July 4, 2025, 139 Stat. 204, provided that: “The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2025.” Pub. L. 119–21, title VII, § 70322(a)(3), July 4, 2025, 139 Stat. 204, provided that: “The amendments made by this subsection [amending this section] shall apply to sales or other dispositions (including pursuant to deemed sales or other deemed dispositions or a transaction subject to section 367(d) of the Internal Revenue Code of 1986) occurring after June 16, 2025.” Pub. L. 119–21, title VII, § 70322(b)(2), July 4, 2025, 139 Stat. 205, provided that: “The amendment made by this subsection [amending this section] shall apply to taxable years beginning after December 31, 2025.” Amendment by section 70323(a)(3)(A)(i), (ii), (b)(1)–(2)(C)(i) of Pub. L. 119–21 applicable to taxable years beginning after Dec. 31, 2025, see section 70323(c) of Pub. L. 119–21, set out as a note under section 172 of this title.Pub. L. 119–21 § 70322(a)(2) · 139 Stat. 204-206
Inserted · 26 U.S.C. § 250(b)(5)(E)
Pub. L. 119–21, § 70322(a)(2), inserted “(other than paragraph (3)(A)(i)(VII))” after “For purposes of this subsection”
Unresolved: Pub. L. 119–21 was not found in the local Statutes at Large index.
Source evidence
Code amendment note
Subsec. (b)(5)(E). Pub. L. 119–21, § 70322(a)(2), inserted “(other than paragraph (3)(A)(i)(VII))” after “For purposes of this subsection”.Effective date note
Pub. L. 119–21, title VII, § 70321(b), July 4, 2025, 139 Stat. 204, provided that: “The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2025.” Pub. L. 119–21, title VII, § 70322(a)(3), July 4, 2025, 139 Stat. 204, provided that: “The amendments made by this subsection [amending this section] shall apply to sales or other dispositions (including pursuant to deemed sales or other deemed dispositions or a transaction subject to section 367(d) of the Internal Revenue Code of 1986) occurring after June 16, 2025.” Pub. L. 119–21, title VII, § 70322(b)(2), July 4, 2025, 139 Stat. 205, provided that: “The amendment made by this subsection [amending this section] shall apply to taxable years beginning after December 31, 2025.” Amendment by section 70323(a)(3)(A)(i), (ii), (b)(1)–(2)(C)(i) of Pub. L. 119–21 applicable to taxable years beginning after Dec. 31, 2025, see section 70323(c) of Pub. L. 119–21, set out as a note under section 172 of this title.
1 of 18 references resolved to an enrolled provision · 17 unresolved
Editorial Notes
Prior Provisions
A prior section 250, added Pub. L. 91–518, title IX, § 901(a), , 84 Stat. 1341; amended Pub. L. 93–496, § 12, , 88 Stat. 1531; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), , 90 Stat. 1834; Pub. L. 95–473, § 2(a)(2)(C), , 92 Stat. 1464; Pub. L. 96–454, § 3(b)(1), , 94 Stat. 2012; Pub. L. 97–261, § 6(d)(3), , 96 Stat. 1107; Pub. L. 99–521, § 4(3), , 100 Stat. 2993, related to certain payments to National Railroad Passenger Corporation, prior to repeal by Pub. L. 101–508, title XI, § 11801(a)(15), , 104 Stat. 1388–520.
Amendments
2025—Pub. L. 119–21, § 70323(b)(2)(C)(i), substituted “Foreign-derived deduction eligible” for “Foreign-derived intangible” in section catchline.
Pub. L. 119–21, § 70323(a)(3)(A)(ii), substituted “net CFC tested income” for “global intangible low-taxed income” in section catchline.
Subsec. (a)(1)(A). Pub. L. 119–21, § 70323(b)(1), substituted “foreign-derived deduction eligible income” for “foreign-derived intangible income”.
Pub. L. 119–21, § 70321(a)(1), substituted “33.34 percent” for “37.5 percent”.
Subsec. (a)(1)(B). Pub. L. 119–21, § 70321(a)(2), substituted “40 percent” for “50 percent” in introductory provisions.
Subsec. (a)(1)(B)(i). Pub. L. 119–21, § 70323(a)(3)(A)(i), substituted “net CFC tested income” for “global intangible low-taxed income”.
Subsec. (a)(2). Pub. L. 119–21, § 70323(b)(2)(A), substituted “foreign-derived deduction eligible income” for “foreign-derived intangible income” in cl. (i) and concluding provisions.
Pub. L. 119–21, § 70323(a)(3)(A)(i), substituted “net CFC tested income” for “global intangible low-taxed income” in cl. (i) and concluding provisions.
Subsec. (a)(3). Pub. L. 119–21, § 70321(a)(3), struck out par. (3). Text read as follows: “In the case of any taxable year beginning after , paragraph (1) shall be applied by substituting—
“(A) ‘21.875 percent’ for ‘37.5 percent’ in subparagraph (A), and
“(B) ‘37.5 percent’ for ‘50 percent’ in subparagraph (B).”
Subsec. (b). Pub. L. 119–21, § 70323(b)(2)(B)(iv), substituted “deduction eligible” for “intangible” in heading.
Pub. L. 119–21, § 70323(b)(2)(B), struck out pars. (1) and (2), redesignated former pars. (4) and (5) as (1) and (2), respectively, and substituted “paragraph (1)(B)” for “paragraph (4)(B)” in par. (2)(B)(ii). Prior to amendment, pars. (1) and (2) defined “foreign-derived intangible income” for purposes of this section and “deemed intangible income” and “deemed tangible income return” for purposes of subsec. (b), respectively.
Subsec. (b)(3)(A)(i)(II). Pub. L. 119–21, § 70323(a)(3)(A)(i), substituted “net CFC tested income” for “global intangible low-taxed income”.
Subsec. (b)(3)(A)(i)(VII). Pub. L. 119–21, § 70322(a)(1), added subcl. (VII).
Subsec. (b)(3)(A)(ii). Pub. L. 119–21, § 70322(b)(1), amended cl. (ii) generally. Prior to amendment, cl. (ii) read as follows: “the deductions (including taxes) properly allocable to such gross income.”
Subsec. (b)(5)(E). Pub. L. 119–21, § 70322(a)(2), inserted “(other than paragraph (3)(A)(i)(VII))” after “For purposes of this subsection”.
Statutory Notes and Related Subsidiaries
Effective Date of 2025 Amendment
Pub. L. 119–21, title VII, § 70321(b), , 139 Stat. 204, provided that: “The amendments made by this section [amending this section] shall apply to taxable years beginning after .”
Pub. L. 119–21, title VII, § 70322(a)(3), , 139 Stat. 204, provided that: “The amendments made by this subsection [amending this section] shall apply to sales or other dispositions (including pursuant to deemed sales or other deemed dispositions or a transaction subject to section 367(d) of the Internal Revenue Code of 1986) occurring after .”
Pub. L. 119–21, title VII, § 70322(b)(2), , 139 Stat. 205, provided that: “The amendment made by this subsection [amending this section] shall apply to taxable years beginning after .”
Amendment by section 70323(a)(3)(A)(i), (ii), (b)(1)–(2)(C)(i) of Pub. L. 119–21 applicable to taxable years beginning after , see section 70323(c) of Pub. L. 119–21, set out as a note under section 172 of this title.
Effective Date
Section applicable to taxable years beginning after , see section 14202(c) of Pub. L. 115–97, set out as an Effective Date of 2017 Amendment note under section 172 of this title.
Credits
2017–2025 · 2 acts
- 2017Added Pub. L. 115–97, title I, § 14202(a), , 131 Stat. 2213
- 2025amended Pub. L. 119–21, title VII, §§ 70321(a), 70322(a)(1), (2), (b)(1), 70323(a)(3)(A)(i), (ii), (b)(1)–(2)(C)(i), , 139 Stat. 204–206.
Show as published
(Added Pub. L. 115–97, title I, § 14202(a), , 131 Stat. 2213; amended Pub. L. 119–21, title VII, §§ 70321(a), 70322(a)(1), (2), (b)(1), 70323(a)(3)(A)(i), (ii), (b)(1)–(2)(C)(i), , 139 Stat. 204–206.)