Tax
GILTI (Global Intangible Low-Taxed Income)
Quick definition
US tax on a foreign subsidiary's income; renamed Net CFC Tested Income (NCTI) under the OBBBA for tax years beginning after Dec 31, 2025.
GILTI imposes a US tax on a Controlled Foreign Corporation's (CFC) income. The OBBBA renamed the regime Net CFC Tested Income (NCTI) for tax years beginning after Dec 31, 2025, eliminated the 10% QBAI exclusion for tangible foreign assets, and reduced the Section 250 deduction to 40%, for an effective US rate of about 12.6% (about 14% after the foreign-tax-credit haircut; the FTC allowance rose to 90%). For most software companies, essentially all foreign subsidiary income is taxed in the US at that rate, plus local foreign tax. Triggers when US parent owns >50% of foreign sub. Requires Form 5471 filing annually.
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Frequently asked questions
- What is GILTI (Global Intangible Low-Taxed Income)?
- GILTI imposes a US tax on a Controlled Foreign Corporation's (CFC) income. The OBBBA renamed the regime Net CFC Tested Income (NCTI) for tax years beginning after Dec 31, 2025, eliminated the 10% QBAI exclusion for tangible foreign assets, and reduced the Section 250 deduction to 40%, for an effective US rate of about 12.6% (about 14% after the foreign-tax-credit haircut; the FTC allowance rose to 90%). For most software companies, essentially all foreign subsidiary income is taxed in the US at that rate, plus local foreign tax. Triggers when US parent owns >50% of foreign sub. Requires Form 5471 filing annually.
- Why is GILTI (Global Intangible Low-Taxed Income) important for startups?
- GILTI (Global Intangible Low-Taxed Income) is a tax concept that matters for startup founders because it shows up in fundraising readiness, financial decision-making, and operational discipline at the stage where mistakes are expensive to undo. Founders who understand it are better prepared for diligence, board meetings, and investor conversations.
- What category does GILTI (Global Intangible Low-Taxed Income) belong to?
- GILTI (Global Intangible Low-Taxed Income) is a Tax term in the StartupCFO finance glossary, alongside other tax concepts that founders, CFOs, and accountants use in startup operations and reporting.
- Where can I learn more about GILTI (Global Intangible Low-Taxed Income)?
- Beyond this definition, see the related tax terms below, or explore StartupCFO's insights and tools that put GILTI (Global Intangible Low-Taxed Income) in context. For specific situations, talk to a fractional CFO who can walk through your numbers.
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