Alysse McLoughlin and Katie Quinn authored a recent installment of SALTy Thoughts in Tax Notes on July 31, 2025.
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After a suspenseful few months, on July Fourth President Trump signed the One Big Beautiful Bill Act (OBBBA, P.L. 119-21) into law. Among the bill’s many changes are amendments to the global intangible low-taxed income provisions in IRC sections 951A and 250, provisions enacted by the Tax Cuts and Jobs Act during the first Trump administration. States have grappled with whether and how to tax GILTI since the TCJA was passed in 2017, and several jurisdictions do tax a material portion of GILTI. In this article we address the state tax implications of the OBBBA’s shift from GILTI to net controlled foreign corporation tested income, including the favorable impact on future factor representation arguments.
OBBBA Changes to the Former GILTI Provisions
The OBBBA’s amendments to IRC sections 951A and 250 are effective for tax years beginning after December 31, 2025. The most obvious of these amendments is that in tax years beginning after December 31, 2025, GILTI is no longer called GILTI. Instead, GILTI is referred to as net CFC tested income, or NCTI.1 Although this name change is welcome to those of us who have been arguing for years that GILTI is not guilty (that is, it’s not composed of domestic profits improperly shifted abroad), the OBBBA’s adoption of NCTI is rooted in an important computational change.