U.S. Innovation and Global Competitiveness Act of 2026

The U.S. Innovation and Global Competitiveness Act of 2026 amends federal tax laws to adjust how multinational corporations are taxed on foreign earnings, primarily by increasing the deduction rate for foreign-derived intangible income from 33.34 percent to 40 percent. The bill modifies the base erosion minimum tax by exempting certain payments made to foreign entities that face a high effective tax rate or operate in jurisdictions with discriminatory taxes, such as digital services taxes. It also eliminates specific inclusions of foreign base company sales and services income while allowing corporations to carry forward net tested losses from controlled foreign corporations for up to five years. Additionally, the legislation expands the research tax credit to all taxpayers rather than just small businesses and provides special rules for transferring intangible property from foreign subsidiaries to U.S. shareholders.