The International Competition for American Jobs Act (S. 1605) makes sweeping changes to how the U.S. taxes multinational corporations and their foreign operations, aiming to reduce the tax burden on U.S. companies with global business activities. The bill permanently extends tax rules allowing controlled foreign corporations to exclude certain related-party income from U.S. taxation, increases tax deductions for domestic corporations earning foreign income, and simplifies several complex international tax provisions including base erosion rules and foreign tax credit categories. It also creates new tax categories to capture income from previously tax-advantaged foreign structures, restricts certain foreign tax credits effective in 2026, and eliminates various tax breaks for foreign subsidiary income from sales and service activities. Most substantive provisions take effect for tax years beginning after December 31, 2025, with some provisions effective in 2026 or upon enactment. The bill primarily affects multinational corporations and foreign-controlled entities, while generally exempting corporations (though not individuals) from certain foreign investment reporting requirements.
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