Latest news with #BigBeautifulBillAct
Forbes
a day ago
- Business
- Forbes
OBBBA Revises Existing GILTI Tax Rules For U.S. Shareholders Of CFCs
WASHINGTON, DC - JULY 04: U.S. President Donald Trump, joined by Republican lawmakers, signs the ... More One, Big Beautiful Bill Act into law during an Independence Day military family picnic on the South Lawn of the White House on July 04, 2025 in Washington, DC. After weeks of negotiations with Republican holdouts Congress passed the One, Big Beautiful Bill Act into law, President Trump's signature tax and spending bill. The bill makes permanent President Donald Trump's 2017 tax cuts, increase spending on defense and immigration enforcement and temporarily cut taxes on tips, while cutting funding for Medicaid, food assistance and other social safety net programs. (Photo by) On July 4, 2025, President Trump signed into law Pub. L. No. 119-21, also known as the 'One Big Beautiful Bill Act' or 'OBBBA'. The OBBBA makes substantial revisions to many parts of the Internal Revenue Code of 1986, as amended (the 'Code'), including notable changes to the existing Global Intangible Low-Tax Income ('GILTI') inclusion rules. These revisions are discussed more below. The GILTI Regime Prior to the enactment of the Tax Cuts and Jobs Act of 2017 ('TCJA'), many U.S. shareholders with interests in controlled foreign corporations ('CFCs') enjoyed income tax deferral on the CFC's non-passive or 'active' trade or business income. Instead of paying income tax on the CFC's business income each year, U.S. shareholders paid income tax only when the funds earned from the CFC's business were repatriated to them in the form of a dividend. The TCJA modified the deferral rules, requiring U.S. shareholders to report most active business income of a CFC as a GILTI inclusion (regardless of whether the funds are repatriated to the U.S.). Section 951A of the Code contains the GILTI inclusion rules. The provision is complex and chock full of statutory definitions and exclusions. At its basics, U.S. shareholders of a CFC include GILTI as income based on the CFC's 'tested income' with certain deductions. In turn, tested income is defined broadly to include most types of active business income earned overseas that are not already subject to U.S. income tax (e.g., tested income excludes subpart F income and income that is effectively connected with a U.S. trade or business). The current GILTI regime includes two significant reductions to the GILTI inclusion. First, a U.S. shareholder may reduce the GILTI inclusion by a 'net deemed tangible income return' or 'NDTIR.' Very generally, shareholders compute their NDTIR as 10% of the shareholder's allocable share of 'qualified business asset investment,' i.e., the CFC's depreciable trade or business assets. Second, a U.S. shareholder who is a domestic corporation or an individual who has made a valid election to be treated as a domestic corporation under Code section 962 may receive an additional GILTI deduction under Code section 250. For the 2025 tax year, the Code section 250 deduction is 50% of the GILTI inclusion. Prior to enactment of the OBBBA, this 50% rate was scheduled to be reduced to 37.5% starting in the 2026 tax year. Example: Domestic Corporation ('DC') owns 100% of Foreign Corporation ('FC'), a CFC. In 2023, FC earned $1 million of trade or business income from non-passive activities outside the U.S. Also in 2023, FC had an average quarterly qualified business asset investment of $500,000. To compute the GILTI inclusion, DC starts with the $1 million of active trade or business income and reduces that amount by the NDTIR, which is 10% of $500,000, or $50,000. With the 50% section 250 deduction of $475,000 ($950,000 x 50%), DC has a GILTI inclusion of $475,000. With current corporate tax rates of 21%, DC must pay U.S. tax of $99,750 with respect to the GILTI inclusion. OBBBA's GILTI Revisions The OBBBA makes several important revisions to the existing GILTI regime. As an initial matter, it eliminates the GILTI inclusion reduction for NDTIR and renames the GILTI inclusion 'Net CFC Tested Income.' Because foreign corporations no longer receive a NDTIR for eligible depreciable assets, U.S. shareholders should be mindful of the potential tax increases in 2026 when the OBBBA provisions become effective. Although the removal of the NDTIR may increase some U.S. shareholders' Net CFC Tested Income, there are some taxpayer-friendly rules in the OBBBA. As mentioned previously, the Code section 250 deduction—currently 50% of the GILTI inclusion—was scheduled for a reduction of 37.5% in 2026. Under the OBBBA, the Code section 250 deduction is revised to 40% without any further reductions planned in the immediate future. Example: Same facts as the example above except DC and FC are now subject to the OBBBA. With the removal of the NDTIR, DC may no longer claim a reduction in GILTI of $50,000 for FC's qualified business asset investment. In addition, DC's section 250 deduction is now 40% of the Net CFC Tested Income, or $400,000. Accordingly, DC must pay income tax of $126,000 (i.e., 21% of $600,000). OBBBA's Foreign Tax Credit Revisions Foreign tax credits often mitigate the U.S. income tax consequences of foreign business activities. Under GILTI, a U.S. corporate shareholder (or an individual shareholder who made a Code section 962 election) can claim deemed foreign tax credits against U.S. income taxes associated with the GILTI inclusion. However, GILTI limited the allowable foreign tax credits to 80% of the foreign taxes associated with the inclusion (subject to an income gross up). The OBBBA also permits U.S. corporate shareholders (or individual shareholders with a Code section 962 election) to claim a deemed foreign tax credit with respect to the Net CFC Tested Income amounts. However, the OBBBA permits these shareholders to claim an increased 90% of the foreign taxes allocable to the income. Summary The U.S. tax rules associated with CFCs are complex and nuanced (e.g., the IRS Form 5471 filing obligation). Because these rules will change for the 2026 tax year, U.S. shareholders with interests in CFCs should consult with their tax advisors to determine the impact of the changes on their unique tax circumstances.
Time of India
2 days ago
- Automotive
- Time of India
Tesla Q2 earnings: Elon Musk sleeps at office again as Wall Street awaits his big reveal on Robotaxis, AI & sales recovery
Ahead of Tesla's second-quarter earnings release on July 23, CEO Elon Musk has made it clear that his focus is back on the company. In a recent social media post on X, Musk stated, 'Back to working 7 days a week and sleeping in the office if my little kids are away.' This return to full-time leadership comes after months of political activity and online controversies. Tesla investors will be closely monitoring Musk's statements during the upcoming earnings call, especially as profit estimates and vehicle sales figures have seen a notable drop. Slowing sales, lower profit expectations Tesla reported sales of around 384,000 vehicles in Q2, a 13% decline compared to the same period last year. In total, the first half of the year saw 721,000 cars sold—significantly lower than the projected 970,000, according to FactSet. Analysts now expect Q2 earnings to be around 39 to 40 cents per share, a drop from last year's 50 cents. Back to working 7 days a week and sleeping in the office if my little kids are away This would mark the sixth earnings decline in the past eight quarters. Despite this, Tesla stock still trades at a high multiple, indicating continued belief in Musk's long-term innovation strategy. AI and robotaxis under investor lens Much of investor optimism hinges on Tesla's advancements in artificial intelligence. The company recently launched AI-driven robotaxis in Austin, Texas. Musk also hinted at regulatory discussions to launch similar services in California and is waiting for approval in Europe and China. Additionally, a promised affordable Tesla model is yet to be revealed. Investors expect updates on both the car and Tesla's AI-trained robots, which are expected to begin mass production by 2026. Musk's other projects also stirred interest. He recently launched a Tesla diner and charging station in Los Angeles. Musk stated, 'If our retro-futuristic diner turns out well... Tesla will establish these in major cities around the world.' Market reaction and political crosswinds Tesla stock was trading at around $331.43 on Monday morning. The stock has been volatile in 2025—up 38% over the past year but still down 18% year-to-date. Musk's earlier political involvement, including endorsing Donald Trump, initially sent the stock to a high of $488.54. However, sales and tariff concerns led to a dip below $215 in April. Investors are also waiting to hear Tesla's position on Trump's 'Big Beautiful Bill Act,' which ends Biden-era EV credits and alters emissions-related financial incentives. Tesla has historically benefited from these credit Tesla earnings loom, all eyes are on Musk's next move — and whether robotaxis can drive future growth.
UPI
5 days ago
- Business
- UPI
New $250 visa fee goes into effect for travelers, foreign workers
Travelers wait to check in at Newark Liberty International Airport on in May in Newark, N.J. The Big Beautiful Bill Act created a $250 "visa integrity fee" for nonimmigrant visas, which could impact tourism. File photo by John Angelillo/UPI | License Photo July 18 (UPI) -- Many visitors to the United States will soon have to pay a $250 "visa integrity fee" to enter the country. The fee was in the One Big Beautiful Bill Act and applies to people from countries who need a nonimmigrant visa to enter. The fee will be added to any other visa application fees. There are few details, which creates "significant challenges and unanswered questions regarding implementation," a spokesperson from the U.S. Travel Association told CNBC Travel. The new law includes fee hikes for those using the Electronic System for Travel Authorization, or ESTA, and new charges for migrants arrested at the border. It creates a $13 ESTA fee, and goes up to $5,000 for the arrests of undocumented people. The visa integrity fee is set at $250 from Oct. 1, 2024, to Sept. 30, 2025, but after that, the Secretary of Homeland Security, Kristi Noem, is free to raise the fee. The applicant will pay the fee when the visa is issued. If the visa is denied, the applicant doesn't have to pay. Steven A. Brown, a partner at immigration law firm Reddy Neumann Brown in Houston, said in a post on his firm's website that it significantly raises prices for those coming into the United states to work. "For example, an H-1B worker already paying a $205 application fee may now expect to pay a total of $455 once this fee is in place," he said. There is also an I-94 form fee that the bill raised from $6 to $24. He added that the law allows the government to give refunds of the visa integrity fee if the person follows all provisions of the visa. But it is unclear how, when and who decides that the refund will be issued. "Until those procedures are announced, employers and foreign nationals should treat the $250 Visa Integrity Fee as a non-refundable upfront cost and plan accordingly," Brown said. Critics say the effect on tourism and workers coming to the United States could be heavy. "Attaching an additional $250 fee has the very real potential to significantly reduce the number of people that can afford to do that," Jorge Loweree, managing director of programs and strategy at the American Immigration Council, told USA Today. "There are hundreds of thousands of people who receive visas and permission from the Department of State to come to the U.S. every single month temporarily." Tourism has already dipped this year, and travel experts call the fee a further detriment. "Raising fees on lawful international visitors amounts to a self-imposed tariff on one of our nation's largest exports: international travel spending," Geoff Freeman, president and CEO of the U.S. Travel Association, told Yahoo. "These fees are not reinvested in improving the travel experience and do nothing but discourage visitation at a time when foreign travelers are already concerned about the welcome experience and high prices."
Forbes
6 days ago
- Business
- Forbes
One Big Tax Break: The Top 5 Business Cuts In The Big Beautiful Bill
WASHINGTON, DC - JULY 04: U.S. President Donald Trump, joined by Republican lawmakers, signs the ... More One, Big Beautiful Bill Act into law on the South Lawn of the White House in Washington, DC. (Photo by) On July 4, 2025, President Donald Trump signed into law what he has called the biggest tax cut in U.S. history—the 'One Big Beautiful Bill Act' (OBBBA). The act is poised to serve as a comprehensive effort to stimulate economic growth, minimize regulatory burdens, and foster greater benefits for entrepreneurs. The Bill introduces a range of tax changes benefiting both individuals and business owners. While the legislation is broad in scope, and extends beyond tax matters, one of its key features is the slate of tax cuts targeted at American businesses, particularly those in the small and growing category. These elements are designed to reduce tax liabilities and encourage capital investment for business owners navigating a challenging post-pandemic economy. Let's take a closer look at the top five business tax cuts in the OBBBA and what they could mean for entrepreneurs in 2025 and beyond. Permanent Extension of the Qualified Business Income Deduction The Act makes a major, permanent change to the tax code by securing the Section 199A pass-through deduction—commonly known as the Qualified Business Income (QBI) deduction—as a permanent feature of U.S. tax law. Originally introduced under the Tax Cuts and Jobs Act (TCJA) of 2017 during President Trump's first term, the QBI deduction allows eligible owners of pass-through entities—such as sole proprietorships, partnerships, S corporations, and certain trusts and estates—to deduct up to 20% of their qualified business income from taxable income. The deduction was a significant tax benefit designed to level the playing field between pass-through businesses and C corporations, which had received a substantial corporate tax rate cut under the same legislation. Under the original TCJA, however, the QBI deduction was scheduled to sunset at the end of 2025, creating uncertainty for millions of small business owners and entrepreneurs who relied on the deduction to reduce their effective tax rate. The expiration would have effectively raised taxes on pass-through businesses, many of which are the backbone of the American economy. By making the QBI deduction permanent, the OBBBA eliminates that looming uncertainty and ensures long-term tax stability for a wide range of businesses. In addition to making the deduction permanent, the OBBBA also raises the income thresholds at which the deduction begins to phase out. Joint filers with taxable income up to $494,600 are now eligible to claim the full deduction, an increase of more than $10,000 over previous limits. This change expands access to higher-earning business owners who were previously limited or excluded from the deduction. Notably, these expanded thresholds will be indexed to inflation beginning in 2026, helping the deduction maintain its value and reach over time. The Act also introduces a minimum deduction safeguard for the smallest businesses. Under the new provision, businesses with at least $1,000 in qualified business income from an active trade or business are guaranteed a minimum deduction of $400, ensuring that even the smallest entrepreneurs benefit. Like the income thresholds, this minimum deduction will also be adjusted for inflation starting in 2026, providing lasting relief to microbusinesses and sole proprietors. Together, these updates to the QBI deduction reflect the OBBBA's broader goal of supporting small businesses, reducing tax burdens, and encouraging long-term investment in the U.S. economy. By removing the expiration date and enhancing accessibility, the Act strengthens a vital tool for American business owners and brings a new level of predictability to tax planning for years to come. Increases Research and Development Deductions The OBBBA introduces a significant change to how businesses handle domestic research and development (R&D) expenses by permanently restoring immediate expensing. This means that companies can now deduct the full cost of their qualified R&D expenditures in the year those expenses are incurred, rather than amortizing them over several years—a requirement that had been in place since 2022 under the TCJA. For small businesses—defined as those with average annual gross receipts of $31 million or less—the law goes a step further. These businesses are allowed to retroactively apply immediate expensing for domestic R&D costs incurred after December 31, 2021, offering a valuable opportunity to amend past returns and recover tax benefits that were previously deferred under the amortization rules. For larger businesses, or those with gross receipts above the $31 million threshold, the legislation allows for a transition period. Domestic R&D expenses incurred between December 31, 2021, and January 1, 2025, that were previously amortized can now be accelerated and deducted over a shortened period of one or two years, depending on the company's choice or eligibility criteria. This acceleration provides meaningful near-term tax relief while phasing in the return to full expensing. Together, these changes are aimed at incentivizing innovation, easing cash flow constraints, and reversing the chilling effect the TCJA's R&D amortization requirement had on business investment in domestic research. The provision is especially beneficial for startups and small tech-driven enterprises, which often rely on R&D investment but lack the capital to wait years for tax benefits to materialize. Increases Business Interest Deductions The new legislation permanently reinstates the EBITDA-based limitation on business interest deductions. EBITDA stands for earnings before interest, taxes, depreciation, and amortization. In 2017, TCJA introduced a limit on business interest expense deductions to 30% of adjusted taxable income (ATI). Initially, from 2018 to 2021, ATI was calculated using an EBITDA-based approach. However, for tax years starting after December 31, 2021, the calculation shifted to an EBIT-based approach (earnings before interest and taxes), which excludes depreciation and amortization. This change generally resulted in stricter limitations and increased tax liability for businesses, particularly capital-intensive companies. In short, by permanently restoring the EBITDA-based limitation, the OBBBA provides many business owners with a greater ability to deduct business interest expenses. This is because the EBITDA-based ATI calculation typically yields a higher ATI amount, enabling a larger interest deduction. This will create some relief for capital-intensive businesses that invest a significant amount into long-lived assets like equipment and machinery. The previous EBIT-based limitation had a negative impact on capital-intensive businesses due to their significant depreciation and amortization expenses. The shift back to EBITDA may alleviate some of the tax burden on these companies in industries like farming and manufacturing. Restores 100 Percent Bonus Depreciation The OBBBA permanently restores 100% bonus depreciation for short-lived investments. Purchases of business assets, such as equipment and vehicles, are now 100% deductible in the year they are purchased and/or put into service for the business. Congress first introduced 100% bonus depreciation as part of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. This allowed for a temporary 100% bonus depreciation rate from September 2010 through the end of 2011. More recently, the TCJA of 2017 allowed businesses to deduct 100% of the cost of eligible property placed in service after September 27, 2017, and before January 1, 2023. The TCJA required bonus depreciation began phasing out in 2023, resulting in a reduction in the percentage deductible, decreasing to 80% for 2023, 60% for 2024, and now 40% for 2025. With the BBB, the deduction will be restored to 100% for 2025 and remain at 100% permanently. Plus, for vehicles purchased in your personal name, the law now provides a deduction for auto loan interest of up to $10,000 for purchases of new vehicles that are assembled in the United States. If the vehicle is purchased personally but used in the business, you can take advantage of the deduction for bonus depreciation and the auto loan interest deduction. Provides 100 percent expensing of new business buildings The Act includes a targeted incentive aimed at stimulating domestic industrial investment through a special provision for structures classified as qualified production property (QPP). These are buildings and facilities that are primarily used in the manufacturing, production, or refining of tangible personal property within the United States. The goal is to encourage companies to expand or modernize their physical infrastructure to support domestic industrial activity and strengthen U.S. supply chains. To qualify for the 100% immediate expensing benefit, certain timing and use conditions must be met. Construction of the QPP structures must commence after January 19, 2025, and before January 1, 2029, offering a defined window during which businesses must begin their projects to be eligible. Additionally, the property must be placed in service no later than January 1, 2031, ensuring that the economic benefits are realized within a reasonable timeframe. However, this tax benefit is not universally available to all types of property within a facility. The provision explicitly excludes parts of a structure that are used for non-production activities, such as office space, administrative functions, employee cafeterias, parking garages, and other ancillary or support areas. Only the portions of the structure that are directly involved in qualifying industrial processes—like assembly lines, fabrication areas, or refining equipment spaces—are eligible for the accelerated deduction. This distinction is critical, as it ensures the tax benefit is narrowly tailored to incentivize core production investments rather than general corporate expansion. By doing so, the OBBBA aims to maximize the economic impact of the expensing provision, driving capital investment directly into the sectors and activities that are central to domestic manufacturing competitiveness and economic resilience. The One Big Beautiful Bill Act marks a sweeping shift in U.S. tax policy, particularly for the business community. By making key provisions permanent—like the Qualified Business Income deduction, 100% bonus depreciation, and EBITDA-based interest deductions—while expanding incentives for research, innovation, and industrial infrastructure, the Act seeks to reduce financial friction for businesses of all sizes. It delivers targeted relief to small businesses and capital-intensive industries alike, while sending a clear message: the U.S. is doubling down on domestic growth, productivity, and entrepreneurship. As business owners look ahead, these tax cuts are poised to not only lower costs but also fuel reinvestment, expansion, and innovation in an economy still reshaping itself in the post-pandemic years ahead. Whether you're a startup founder, manufacturer, or seasoned entrepreneur, the OBBBA's top five tax breaks represent new opportunities—and new responsibilities—to plan smart and grow strong.
Forbes
6 days ago
- Business
- Forbes
No Tax On Overtime Explained
WASHINGTON, DC - JULY 04: U.S. President Donald Trump, joined by Republican lawmakers, signs the ... More One, Big Beautiful Bill Act into law during an Independence Day military family picnic on the South Lawn of the White House on July 04, 2025 in Washington, DC. After weeks of negotiations with Republican holdouts Congress passed the One, Big Beautiful Bill Act into law, President Trump's signature tax and spending bill. The bill makes permanent President Donald Trump's 2017 tax cuts, increase spending on defense and immigration enforcement and temporarily cut taxes on tips, while cutting funding for Medicaid, food assistance and other social safety net programs. (Photo by) Getty Images Should working longer hours mean keeping more of your paycheck? The Trump administration and authors of the One Big Beautiful Bill Act (OBBBA) seemed to answer in the affirmative. Starting in 2025, a large chunk of overtime pay will not be subject to federal income tax. It's a populist-sounding provision with bipartisan support or, put differently, an easy applause line in a hard economy. But, if you peel back the campaign slogans, the policy raises some deeper questions about fairness, labor markets, and whether the tax code should play favorites with how we work. To be clear, the 'no tax on overtime' policy isn't really a blanket exemption on overtime pay—it's a deduction, capped at $12,500 for individuals and $25,000 for married couples filing jointly. It applies only to qualified overtime compensation under the Fair Labor Standards Act (FLSA), meaning the time-and-a-half pay earned by non-exempt workers—generally hourly employees making less than $35,568 per year. It isn't the full overtime amount that is deductible, it's the extra compensation over regular wages. So, if you make $20 an hour and $30 in overtime, only that $10-per-hour difference counts. The deduction phases out incrementally above $150,000 in individual income and the entire provision sunsets in 2028—though it has a good chance of becoming politically permanent. Despite the campaign trail framing, this isn't a windfall for most workers. The biggest winners are going to be middle-income workers who work significant overtime and still owe federal income taxes after the standard deduction and other credits. Many low-wage workers—especially those with dependents—already have little to no federal income tax liability owing to the expanded standard deduction and child tax credit. For them then, this deduction is worthless. But if you imagine a single factory worker putting in 50-hour weeks at $22 per hour, the difference could be hundreds of dollars. In practice, this is a modest tax break for a very specific demographic of working-class voter. Assuming that factory worker regularly worked ten hours in overtime, they'd be able to deduct about $5,700 from taxable income at the end of the year. That isn't a credit, mind you, it is just what will be deducted from their total income of about $62,900. If you crunch the numbers, the provision will save that factory worker about $900 per year in tax liability. On paper, and as a political plank, this policy rewards hard work. In practice, it is a subsidy for a particular kind of work: hourly, eligible-for-overtime, and just tax-liable enough. In other words, a tax subsidy for financial precarity. Here is where things start to get distortive. Two workers each earning the same $62,900 per year could face very different tax bills depending on how their income is structured—say, one salaried and the other hourly with overtime. That violates the concept of horizontal equity, the idea that similarly situated people should be taxed similarly. This deduction suggests we want to tax based on effort, not earnings. It also sets up some predictable behavioral incentives on the part of employers. They are already playing cat-and-mouse with overtime classification rules—now they have a real reason to game it. Lower base wages, more overtime hours, and absolutely no additional cost to the firm. Workers' incentives will be aligned, and they may find themselves chasing longer shifts to qualify for the deduction. Economically, subsidizing overtime doesn't create jobs—it actually destroys them on paper. When existing workers are pressed to work longer hours, employers have less need to hire on additional staff. A 50-hour week for one employee can be replaced by tacking on an additional ten hours across five separate workers. The overtime deduction thus may boost take-home pay for some, but it does so by encouraging a labor distribution that concentrates hours in the hands of fewer people. In strict policy terms, this is a stealth anti-job creation measure. Policy Tradeoffs and the Politics That Drive Them At $89 billion over ten years, the 'no tax on overtime' provision is more of a rounding error as against the $3 trillion OBBBA cost . And yet, each rounding error comes at the expense of something else. The money spent on the OBBBA could've expanded the Earned Income Tax Credit, or funded a refundable childcare benefit. It could have boosted wages through direct support. Instead, we've chosen to reward more hours, not better jobs. And, contrary to campaign spin and political bluster, this won't expand the labor market—economically, it's closer to a job killer. The politics, however, are easy. Subsidizing 'hard work' polls well and cuts cleanly across partisan lines. It plays to a cultural narrative, a Horatio Alger story, that values hustle over balance. Republicans can call it a reward for effort, and Democrats can back it for working-class symbolism, if not effects. No one is eager to point out that the federal government just made overtime the most tax-advantaged income in America.
