AES · 10-Q · 2026Q2 · Full report

U.S. Tax Law Reform

AES CORP · 2026-08-04 · Importance 49 · Surprise 60 · In source text

The 2025 Act amended the U.S. Global Intangible Low-Taxed Income regime, renamed Net CFC Tested Income, beginning January 1, 2026, subjecting a portion of AES’s foreign earnings to current U.S. taxation. The revised rules provide a 14% effective tax rate on captured foreign income through a 40% deduction, but AES may not benefit fully if it has U.S. net operating losses or insufficient taxable income and may be unable to use foreign tax credits. The legislation also retroactively changed the net-interest deduction limitation from 30% of tax-basis EBIT to interest income plus 30% of tax-basis EBITDA, which AES expects to increase current-period permitted deductions. AES states that the NCTI and related foreign-tax-credit changes may be material.

Key facts

• The 2025 Act was enacted July 4, 2025 and significantly revised laws governing U.S. renewable energy tax credits and taxation of certain foreign earnings source
• The 2025 Act amended GILTI to NCTI effective January 1, 2026 and provides a reduced 14% effective tax rate on captured foreign income by way of a 40 percent deduction source

Impact estimates