Bringing foreign cash home in 2026 follows a new playbook. Earnings your company already paid US tax on come out tax-free as previously taxed income. The 2026 tax law made those pools bigger: the GILTI replacement taxes more income each year, so more of it becomes tax-free on the way out. And once the cash lands, permanent 100% bonus depreciation and a new factory-building write-off give you strong reasons to spend it at home.
The rule that makes repatriation cheap
Here is the core idea. When a US shareholder pays US tax on a foreign subsidiary's earnings in the year they are earned (through Subpart F or the GILTI/NCTI inclusion), those earnings become "previously taxed earnings and profits," or PTEP. A later distribution of PTEP is excluded from gross income under Section 959(a). You are not taxed twice on the same dollar.
Distributions follow a fixed order: first from Section 959(c)(1) PTEP, then Section 959(c)(2) PTEP, and only then from earnings never taxed in the US. Separately, dividends from a foreign subsidiary to a US corporate parent can often come home with no extra US tax under the Section 245A participation exemption.
Two mechanics deserve attention. Track your stock basis: it rises with the inclusion and falls when PTEP is distributed, and missing that means misstating gain on a later sale. And if the foreign company keeps its books in another currency, a foreign-exchange gain or loss can still arise on the distribution under Section 986(c), even though the distribution itself is tax-free.
NCTI makes your PTEP pools bigger
The One Big Beautiful Bill Act (signed July 4, 2025) replaced GILTI with Net CFC Tested Income (NCTI) for tax years beginning after December 31, 2025. The old 10% exclusion for tangible business assets is gone, the Section 250 deduction fell from 50% to 40%, and the effective corporate rate rose from 10.5% to 12.6%. The offset is a better foreign tax credit (90% of foreign taxes instead of 80%), and a foreign rate around 14% generally wipes out the US residual tax.
For repatriation, the effect is mechanical. Every dollar of NCTI included in income creates a matching dollar of PTEP. Because NCTI inclusions run bigger than GILTI inclusions did, PTEP pools now grow faster, and more of your foreign cash pile becomes the kind that distributes tax-free.
FDDEI changes the math for exporters
Exporters get a parallel update. FDII became Foreign-Derived Deduction Eligible Income (FDDEI), with the Section 250 deduction moving from 37.5% to 33.34%, for about a 14% effective rate. That still beats the 21% regular corporate rate by a wide margin, so export income earned through a US company keeps a real advantage.
The question for exporters is how FDDEI compares with IC-DISC treatment on the same income, since the two regimes can interact and the better answer depends on margins, ownership, and where functions sit. Run both calculations before you lock in the structure, because the choice feeds directly into the distribute-versus-redeploy decision below.
Two big reasons to spend the cash at home in 2026
First, 100% bonus depreciation is permanent again. Under Section 168(k), property acquired after January 19, 2025 can be fully expensed in the year it is placed in service, so equipment bought with repatriated cash can largely pay for itself in tax savings in year one.
Second, a brand-new provision covers the building itself. Section 168(n) allows an elective 100% write-off for "qualified production property": the manufacturing portion of a new nonresidential building. Construction must begin after January 19, 2025 and before January 1, 2029, with the building placed in service before January 1, 2031. Office space, parking, and research areas do not qualify, and the IRS issued interim guidance in Notice 2026-16. If the building stops being used for production within 10 years, part of the deduction is recaptured.
The supporting cast got better too
Domestic research costs are immediately deductible again under the restored Section 174 rules, the Section 179 expensing limit rose to $2.5 million, and the Section 163(j) interest limit went back to the more generous EBITDA-based calculation. Together these lower the after-tax cost of building, equipping, and staffing US operations. Model them as a package: bonus depreciation on the equipment, Section 168(n) on the building shell, immediate expensing on the domestic research inside it. That stacking is what makes deploying cash at home in 2026 different from prior years. One honest limit: bonus depreciation is generally for property used in the United States, so equipment used predominantly abroad falls outside it.
The 2026 decision: distribute, redeploy, or hold
Most groups face three choices for each foreign cash pool: distribute it to the US parent, redeploy it into foreign operations, or hold it where it sits. Three questions sort the answer.
First, how much of the pile is already taxed? Pull the PTEP ledger before anything else. Every dollar of PTEP is a dollar that moves without US tax friction, so a pool that is mostly PTEP argues for distributing. A pool that is mostly untaxed earnings needs harder math.
Second, what would the cash earn at home? Take a simple example: a $5 million equipment purchase funded with repatriated PTEP could generate roughly $1 million of year-one US tax savings at a 21% rate through bonus depreciation. Compare that return against leaving the cash in a foreign money-market account.
Third, what does holding cost? Local taxes, currency exposure, and the compliance cost of tracking PTEP, E&P, and credit baskets across entities all weigh on the hold option. Year-end is the natural moment to run this review, because full-year earnings, foreign taxes, and distributions are finally visible and there is still time to act.
Four traps to avoid
Withholding taxes on the way out are often not creditable in the US, so plan distributions through treaties and structures that reduce them rather than assuming a credit will fix it. Where no treaty relief exists, consider whether an intercompany loan or a royalty stream moves the cash at a lower total cost than a dividend. Foreign-exchange gain on a PTEP distribution can create taxable income even when the distribution itself is excluded, so model the currency piece. States do not always follow the federal exclusion, so confirm the state result before you move the cash. And do not run any of this through a 2025 model: the NCTI base, the 90% credit, and the new expense allocation rules all changed the arithmetic.
Frequently asked questions
Is a distribution of previously taxed earnings taxable in the US?
No. Section 959(a) excludes PTEP distributions from gross income. Distributions are treated as coming first from Section 959(c)(1) PTEP, then Section 959(c)(2) PTEP, and only then from untaxed earnings, so the already-taxed money comes out before the taxable money does.
What is the cheapest way to bring cash home in 2026?
Map the PTEP ledger first. PTEP distributes tax-free, and it comes out before untaxed earnings. For a US corporate parent, the Section 245A participation exemption can also eliminate US tax on dividends from foreign subsidiaries. The expensive mistake is distributing blindly and discovering later that untaxed earnings came out first.
Can we claim bonus depreciation on assets we buy abroad?
Generally no. Bonus depreciation is for property used predominantly within the United States. Property used predominantly outside the US is generally excluded. If the plan is to deploy repatriated cash into foreign equipment, model it without the bonus benefit.
Should we distribute before year-end?
Year-end is the best planning window. By then you can see full-year earnings, foreign taxes paid, PTEP balances, and cash needs, and you still have time to choose the timing and form of the distribution. Waiting until the tax return is prepared means the transaction already happened and the planning options are gone.
Our foreign company is in a low-tax country. Does repatriation still make sense?
Often yes, because the NCTI inclusion already taxed those earnings at up to 12.6% before credits. Distributing the resulting PTEP adds no second layer of US tax. The real question is not whether the cash can come home cheaply, but what it earns once it is here.
Related reading on wtpadvisors.com
Our original repatriation planning guide covers the foundational methods (dividends, intercompany loans, royalties, management fees) in detail; this article updates the decision inputs for 2026. For the mechanics behind the bigger PTEP pools, see our GILTI tax strategy guide. If the new rules make you rethink where the group holds functions and assets, read cross-border tax structuring. Exporters weighing FDDEI against IC-DISC should see IC-DISC vs. FDII: which saves more tax in 2026. Clean ownership and distribution records start with Form 5471 compliance, and our ExPortal platform is built to track exactly these cross-border attributes.
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