GILTI High-Tax Exception Calculator 2026
Calculate GILTI inclusion with and without the High-Tax Exception (HTE) election. Model CFC effective tax rates, Β§250 deduction, and optimal HTE election strategy for multinational corporations.
$
Gross tested income minus tested loss allocable to the CFC $
Taxes paid or accrued to foreign government on tested income $
Avg net basis of depreciable tangible assets. GILTI = Net Tested Income β (10% Γ QBAI) %
Percentage owned by the US corporation or individual %
β
HTE Eligible? (>18.9%)
0%
Foreign Effective Rate
$0
GILTI Inclusion (without HTE)
$0
Tax Saved by HTE Election
GILTI Analysis
How the GILTI High-Tax Exception Works
GILTI (Global Intangible Low-Taxed Income) under IRC Β§951A captures CFC income above a 10% routine return on tangible assets. The HTE election under Reg Β§1.951A-2(c)(7) allows exclusion of tested income already taxed at more than 18.9% (90% Γ 21% US rate) in the foreign country β eliminating GILTI liability on that income entirely.
The Formula
Foreign Effective Rate = Foreign Taxes / Net Tested Income
HTE Threshold = 90% Γ US Corporate Rate = 18.9% (at 21%)
GILTI Inclusion = Net Tested Income β (10% Γ QBAI) [before HTE]
After Β§250 Deduction: Net GILTI = Inclusion Γ (1 β 50%)
US Tax on GILTI = Net GILTI Γ US Rate β Foreign Tax Credits (deemed paid)
With HTE: If Foreign Rate > 18.9%, GILTI Inclusion = $0
HTE Threshold = 90% Γ US Corporate Rate = 18.9% (at 21%)
GILTI Inclusion = Net Tested Income β (10% Γ QBAI) [before HTE]
After Β§250 Deduction: Net GILTI = Inclusion Γ (1 β 50%)
US Tax on GILTI = Net GILTI Γ US Rate β Foreign Tax Credits (deemed paid)
With HTE: If Foreign Rate > 18.9%, GILTI Inclusion = $0
Sources and References (click to expand)
- IRC Β§951A β Global Intangible Low-Taxed Income (GILTI) inclusion rules
- Treasury Reg Β§1.951A-2(c)(7) β GILTI High-Tax Exception final regulations (July 2020)
- IRS Notice 2020-69 β GILTI High-Tax Exception election and transition rules
- IRS Form 8992 β US Shareholder Calculation of GILTI (with HTE election statement)
- IRC Β§250 β FDII and GILTI deduction (50% deduction for corporations)
Extended
Multi-CFC GILTI Optimizer
Enter multiple CFCs with different effective rates. Compare GILTI under HTE vs no HTE. Bar chart of tax savings by CFC.
Model multiple CFCs with different foreign effective rates. See whether HTE election benefits your overall GILTI position β remembering the all-or-nothing rule.
Remember: HTE is all-or-nothing. If you elect HTE, it applies to ALL CFCs. A CFC with <18.9% effective rate does not benefit from HTE β the election may hurt if you have low-tax CFCs where Β§250 deduction + credits are more valuable.
| CFC | Tested Income | Foreign Rate | HTE Eligible? | GILTI w/o HTE | GILTI w/ HTE | Savings |
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Frequently Asked Questions
What is the GILTI High-Tax Exception (HTE)?
The GILTI High-Tax Exception (HTE) is an election under Treasury Reg Β§1.951A-2(c)(7) that allows a US shareholder to exclude from GILTI (Global Intangible Low-Taxed Income) any tested income of a controlled foreign corporation (CFC) that is taxed at an effective rate exceeding 18.9% in the foreign country (90% of the 21% US corporate rate). The election is annual and all-or-nothing β it applies to ALL CFCs of the US shareholder, not selectively per CFC. The HTE was finalized effective for tax years beginning on or after July 23, 2020.
What is the 18.9% threshold and how is it calculated?
The HTE threshold is 90% of the highest US corporate rate (21%). 90% Γ 21% = 18.9%. For each "tested unit" (generally each CFC), the effective foreign tax rate is calculated as: foreign taxes paid and accrued by the tested unit / net tested income of the tested unit. If this rate exceeds 18.9%, the tested unit's income is eligible for exclusion from GILTI. If the rate is exactly 18.9% or below, the income is included in the GILTI calculation. This creates a threshold effect β even a slightly higher foreign tax rate can eliminate GILTI liability entirely for that CFC.
Is the HTE election annual and what is the "all-or-nothing" rule?
Yes, the HTE election is made annually on the US shareholder's return and applies to all CFCs of that shareholder β you cannot elect HTE for some CFCs and not others. This all-or-nothing nature requires careful analysis: electing HTE may benefit CFCs with high foreign tax rates (excluding their income from GILTI) but may also force exclusion from CFCs where the 50% Β§250 deduction and foreign tax credits would have been more beneficial. The election is made on Form 8992 with an attached statement.
How does the Β§250 GILTI deduction interact with the HTE?
Under IRC Β§250(a)(1)(B), corporations can deduct 50% of GILTI inclusion (and FDII) for tax years through 2025. For 2026 and beyond, the rate drops to 37.5% under current law if TCJA changes expire. The Β§250 deduction reduces the effective US tax on GILTI income. If the foreign effective rate is close to 18.9%, the HTE election may not be beneficial β it's better to include the income in GILTI, take the 50% deduction, and claim foreign tax credits. The optimizer must compare: HTE exclusion vs. GILTI inclusion with deduction + credits.
What is a "tested unit" for GILTI purposes?
Under Reg Β§1.951A-2(c)(7)(iv), a tested unit is defined as: (1) a CFC itself (if it is a per se CFC for US tax purposes), (2) a qualified business unit (QBU) of a CFC (branch operations in a different country), or (3) a transparent entity owned by a CFC. The tested unit concept allows income in different jurisdictions to be analyzed separately for the HTE, even within the same CFC structure. Each tested unit's effective rate is computed separately β a CFC with operations in a high-tax jurisdiction can qualify for HTE even if other parts of the same CFC would not.