Comparing FDII (Now FDDEI) and GILTI (Now NCTI)

How did the One Big Beautiful Bill Act (OBBBA) impact FDII?

Enacted in 2025, the One Big Beautiful Bill Act renamed FDII to FDDEI and streamlined the calculation by, in part, removing the multiplication of deemed intangible income (DII) by the foreign derived ratio. It also removes DII, and consequently deemed tangible income return, from the FDII calculation.

The law expands the exceptions to deduction eligible income (DEI) from six to eight categories and reduces the types of expenses considered when calculating DEI.

Additionally, the law reduces the deduction rate of FDDEI to 33.34%, changing the effective tax rate from 13.125% to a rounded 14%.

The changes to FDII are applicable to taxable years beginning after Dec. 31, 2025.

[To understand all the tax changes and implications from the OBBBA, download our One Big Beautiful Bill Act Roadmap.]