State Taxation of Foreign Income After OBBBA: Transitioning From GILTI to NCTI, Section 163(j) Interest Limitations

This webinar will examine how recent federal international tax changes under the One Big Beautiful Bill Act (OBBBA), particularly the transition from GILTI to net CFC tested income (NCTI), are reshaping the state taxation of foreign income for multistate taxpayers. Our panel of state and local tax experts will analyze how the elimination of the QBAI exclusion, permanent changes to the Section 250 deduction, revised expense allocation rules, and modified foreign tax credit mechanics are creating significant—and often unexpected—state tax exposure.

As states incorporate NCTI through rolling or updated conformity—often without foreign tax credits—the combined effect of expanded NCTI bases, larger Section 78 gross ups, and outdated apportionment rules can significantly increase state taxable income. States continue to apply widely divergent methods for taxing foreign income. Some states include NCTI directly in the tax base; others treat it as dividend or Subpart F income subject to partial exclusion; and still others apply addback, subtraction, or apportionment rules that can significantly distort the tax base. For many taxpayers, routine conformity now creates unintended state tax exposure that departs sharply from both prior practice and federal intent.

Listen as our panel of SALT practitioners explains how OBBBA has altered the state taxation of foreign income, identifies jurisdictions posing heightened risk under the new NCTI framework, and provides practical guidance for navigating compliance, planning, and audit considerations in today's evolving state tax environment.