To amend the Internal Revenue Code of 1986 to repeal the scheduled reduction in the deduction for foreign-derived intangible income.
Sponsors
Legislative Progress
IntroducedMr. Feenstra (for himself and Mr. Morelle) introduced the following …
Summary
What This Bill Does
The "Growing and Preserving Innovation in America Act of 2025" prevents a scheduled tax increase on American companies that earn money from intellectual property (like patents, software, and pharmaceutical formulas) sold or licensed to foreign customers. Under current law, a tax deduction for this type of income is set to be cut nearly in half in 2026—from 37.5% to 21.875%. This bill cancels that cut, keeping the more generous 37.5% deduction in place permanently.
Who Benefits and How
The primary beneficiaries are large multinational corporations with valuable intellectual property portfolios. Technology companies like Apple, Microsoft, and Google benefit by continuing to pay lower taxes on foreign sales of software, cloud services, and technology licenses. Pharmaceutical and biotechnology companies like Pfizer, Merck, and Johnson & Johnson benefit by maintaining lower tax rates on foreign sales of drugs and medical technologies developed from their patents. These companies will avoid a significant tax increase that would have occurred in 2026, allowing them to keep more of their foreign-derived profits.
Who Bears the Burden and How
U.S. taxpayers bear the cost of this bill through reduced federal revenue. By maintaining the higher tax deduction, the federal government collects less corporate income tax—estimated at tens of billions of dollars over the next decade. This foregone revenue either increases the federal deficit or must be made up through other taxes, spending cuts, or reduced government services. The burden falls particularly on ordinary taxpayers who don't have access to such specialized international tax planning strategies.
Key Provisions
- Amends Section 250 of the Internal Revenue Code to permanently maintain the Foreign-Derived Intangible Income (FDII) deduction at 37.5%
- Prevents the scheduled 2026 reduction that would have lowered the deduction to 21.875%
- Applies to income derived from intangible property (patents, copyrights, trademarks, trade secrets) that generates revenue from foreign sales or licensing
- Takes effect immediately upon enactment, providing certainty to companies planning their international tax strategies
- Benefits companies that export IP-intensive products and services, particularly in technology, pharmaceutical, and advanced manufacturing sectors
Evidence Chain:
This summary is derived from the structured analysis below. See "Detailed Analysis" for per-title beneficiaries/burden bearers with clause-level evidence links.
Primary Purpose
Repeals the scheduled 2026 reduction in the tax deduction for foreign-derived intangible income (FDII), maintaining the deduction at 37.5% instead of reducing it to 21.875%
Policy Domains
Legislative Strategy
"Preserve tax incentive for companies earning income from intellectual property exported or licensed abroad; prevent scheduled tax increase on foreign-derived IP income"
Likely Beneficiaries
- Multinational corporations with significant intellectual property portfolios
- Technology companies
- Pharmaceutical companies
- Companies exporting IP-intensive products and services
Likely Burden Bearers
- Federal Treasury (reduced tax revenue)
- U.S. taxpayers (who must make up the revenue shortfall through other taxes or reduced services)
Bill Structure & Actor Mappings
Who is "The Secretary" in each section?
Key Definitions
Terms defined in this bill
Income derived from intangible property (like patents, copyrights, trademarks) that is earned from foreign sales or services, as defined in IRC Section 250
We use a combination of our own taxonomy and classification in addition to large language models to assess meaning and potential beneficiaries. High confidence means strong textual evidence. Always verify with the original bill text.
Learn more about our methodology