Page 1: Start Saving More on Foreign Income
If your business earns money overseas, you can benefit from better tax treatment on foreign income with FDII and GILTI rule updates. These updates are a big deal in 2025 and can help you pay less in U.S. taxes.
To put it simply, the U.S. wants to help companies that sell products or services to customers in other countries. At the same time, it wants to stop companies from moving profits to low-tax countries just to pay less tax. That’s why FDII and GILTI rules were created.
So, what do they mean?
- FDII stands for Foreign-Derived Intangible Income. It gives your business a tax break when you earn money from overseas.
- GILTI stands for Global Intangible Low-Taxed Income. It makes sure you’re not hiding profits in tax havens.
With these two rules together, businesses can better manage taxes and keep more of what they earn. Many are already starting to benefit from better tax treatment on foreign income with FDII and GILTI rule updates.
Page 2: How the Tax Rules Work Together
FDII Helps With Exports and Services
FDII lowers your tax rate when your company earns money by selling goods or services to customers outside the U.S. For example, if you sell software or license a product overseas, you could get taxed at just 13.125% instead of the usual 21% corporate tax rate.
But to qualify, your business must be based in the U.S. and use intangible assets—like patents, code, or know-how—to make those foreign sales happen. That’s how FDII rewards innovation.
GILTI Prevents Profit Shifting
GILTI was designed to stop companies from avoiding taxes by moving income to places with very low tax rates. Before, GILTI taxed some profits unfairly—even when companies were already paying taxes in other countries.
Now, in 2025, the rule is more balanced. It allows companies to get more credit for foreign taxes they’ve already paid. That means less double taxation and more fairness.
When you benefit from better tax treatment on foreign income with FDII and GILTI rule updates, you get the best of both worlds: lower U.S. taxes and smart use of foreign income rules.
Page 3: Your Action Plan for 2025
Step 1: Review Your Income Sources
First, look at how much of your income comes from customers in other countries. This is key to using FDII.
Step 2: Track Your Foreign Taxes
Next, keep good records of what taxes you pay to foreign governments. These will help you lower your GILTI tax bill.
Step 3: Talk to a Tax Expert
Even though these rules sound complex, a good tax advisor can guide you. They can help you make smart changes to how you report income, how your company is set up, and what deductions you can use.
With the right plan, your company can clearly benefit from better tax treatment on foreign income with FDII and GILTI rule updates. These updates offer real savings and help American companies stay strong in a global market.
