House Taxwriter Introduces International Reform Bill

House Ways and Means Committee member Ron Estes, R-Kan., has introduced legislation (H.R. 10431) that would overhaul international tax rules.

The U.S. Innovation and Global Competitiveness Act of 2026 includes reforms designed to increase the deduction for foreign-derived deduction-eligible income (FDDEI), soften the tax on net tested controlled foreign corporation income (NCTI), and address taxpayer concerns over the base erosion and anti-abuse tax (BEAT).

The sweeping reform bill has garnered significant attention from the tax community, but many of the provisions are recycled from proposals that were ultimately abandoned during negotiations over the One Big Beautiful Bill Act. 

Major proposed changes include:

• NCTI
  • Eliminating the 90% “haircut” for foreign tax credits (FTCs);
  • Allowing NCTI losses to be carried forward; and
  • Reducing the FTC limitation baskets from four to two.
• FDDEI
  • Raising the deduction from 33.34% to 40%; and
  • Removing the taxable income limit and allowing FDDEI deductions to create net operating losses.
• BEAT
  • Allowing general business credits to offset BEAT liability and removing them from the BEAT calculation; and
  • Creating a high-tax exception for payments to related parties subject to a foreign effective rate of at least 18.9% unless the jurisdiction has imposed a digital services tax.

The legislation represents a serious reform effort from a member of the Ways and Means Committee, but it is largely aspirational at this point. It does not yet have any cosponsors and was not endorsed by Ways and Means Committee Chair Jason Smith, R-Mo.