BEAT Section 59A Calculator 2026 β Base Erosion Anti-Abuse Tax
Calculate the Base Erosion and Anti-Abuse Tax (BEAT) under IRC Section 59A. Determine BEP test, Modified Taxable Income, tentative minimum tax, and additional BEAT owed.
Company Financials
$
3-year average; must exceed $500M to be subject to BEAT $
Deductible royalties, interest, services paid to foreign related parties $
All allowable deductions used in BEP calculation $
Taxable income before BEAT add-backs $
Actual corporate tax owed (usually ~21% of taxable income) $0
Additional BEAT Owed
0.0%
Base Erosion Percentage
$0
Modified Taxable Income
$0
Tentative Minimum Tax (10%)
BEAT Calculation Breakdown
How the BEAT Calculation Works
The BEAT is a floor on tax liability for large multinationals. If a company's regular tax is already high, no additional BEAT is owed. The BEAT only triggers when deductible payments to foreign affiliates reduce regular taxable income below the BEAT floor.
Step-by-Step BEAT Formula
Step 1: Base Erosion Percentage (BEP) = Base Erosion Payments Γ· Total Deductions
Step 2: BEP test β must be β₯ 3% (2% for banks) to be subject to BEAT
Step 3: Modified Taxable Income (MTI) = Regular Taxable Income + Base Erosion Payments
Step 4: Tentative Minimum Tax = MTI Γ BEAT Rate (10% in 2026)
Step 5: Additional BEAT = max(Tentative Min Tax β Regular Tax, 0)
Step 2: BEP test β must be β₯ 3% (2% for banks) to be subject to BEAT
Step 3: Modified Taxable Income (MTI) = Regular Taxable Income + Base Erosion Payments
Step 4: Tentative Minimum Tax = MTI Γ BEAT Rate (10% in 2026)
Step 5: Additional BEAT = max(Tentative Min Tax β Regular Tax, 0)
Example Calculation
Large multinational: $2B gross receipts, $80M base erosion payments, $500M deductions
BEP = $80M Γ· $500M = 16% (exceeds 3% threshold β BEAT applies)
MTI = $200M + $80M = $280M
Tentative Minimum Tax = $280M Γ 10% = $28M
Regular Tax = $42M
Additional BEAT = max($28M β $42M, 0) = $0 (regular tax exceeds BEAT floor)
BEP = $80M Γ· $500M = 16% (exceeds 3% threshold β BEAT applies)
MTI = $200M + $80M = $280M
Tentative Minimum Tax = $280M Γ 10% = $28M
Regular Tax = $42M
Additional BEAT = max($28M β $42M, 0) = $0 (regular tax exceeds BEAT floor)
Sources and References (click to expand)
- IRC Section 59A β Base Erosion and Anti-Abuse Tax
- Treasury Regulation 1.59A-1 β BEAT Applicability Rules
- IRS Form 8991 β Tax on Base Erosion Payments of Taxpayers With Substantial Gross Receipts
- Tax Cuts and Jobs Act of 2017 (TCJA) β Public Law 115-97
- IRS Notice 2018-7 β Guidance on Section 59A Base Erosion and Anti-Abuse Tax
- Treasury Final Regulations on Section 59A (BEAT)
Extended
BEAT Multi-Year Projection Calculator 2026β2030
Project BEAT liability across 2026β2030 as rates increase from 10% to 12.5%, with SVG trend chart
Project BEAT liability from 2026 to 2030 as statutory rates increase. Enter your financials below for a multi-year BEAT exposure analysis.
$
Regular taxable income + base erosion payments $
Expected regular corporate tax each year %
Expected annual growth in modified taxable income %
BEAT Liability Projection 2026β2030
| Year | BEAT Rate | MTI | Tentative Min Tax | Regular Tax | Additional BEAT |
|---|
Frequently Asked Questions
What is the Base Erosion and Anti-Abuse Tax (BEAT)?
The BEAT is a minimum tax under IRC Section 59A that applies to large multinational corporations. It was enacted by the Tax Cuts and Jobs Act of 2017 to prevent companies from eroding the U.S. tax base by making deductible payments to foreign affiliates. It applies to corporations with average annual gross receipts exceeding $500 million over a 3-year period.
What is the Base Erosion Percentage (BEP) test?
The BEP equals deductible base erosion payments to foreign affiliates divided by total deductions. A company is subject to BEAT only if the BEP is at least 3% (2% for banks and registered securities dealers). Base erosion payments include royalties, interest, service fees, and amounts paid for depreciable property paid to foreign related parties.
What are the current BEAT rates?
The BEAT rate was 5% for 2018 (with a 6% rate for banks), 10% for 2019 through 2025 (11% for banks), and increases to 10% for 2026 (12.5% starting 2028 under current law). These rates apply to Modified Taxable Income (MTI), and the BEAT equals the excess of the BEAT tentative minimum tax over the regular corporate tax liability.
How is Modified Taxable Income (MTI) calculated?
MTI equals regular taxable income plus base erosion payments (the deductions disallowed for BEAT purposes). Essentially, you add back the deductible payments made to foreign affiliates that qualify as base erosion payments. The BEAT tentative minimum tax is then the applicable BEAT rate multiplied by the MTI.
When does a company actually owe BEAT?
A company owes BEAT only when the tentative minimum tax (BEAT rate x MTI) exceeds the regular corporate income tax liability. The additional BEAT owed equals the excess of the tentative minimum tax over the regular tax. Companies with very high regular tax rates may owe little or no BEAT even with significant base erosion payments.