The IRS released guidance Thursday on when a foreign tax credit limit included in Republicans’ $3.4 trillion tax-and-spending law is applicable to previously taxed foreign-earned income.
Notice 2025-77 states that the IRS intends to propose regulations on the applicability date of Section 960(d)(4) of the federal tax code. Republicans amended the tax code to extend the foreign tax credit limitation under the US’s minimum tax on foreign-earned income to the so-called Net CFC Tested income that was previously taxed.
The NCTI “hair cut,” as it’s colloquially called, imposes a limitation on companies’ ability to take its full foreign tax credit ...