Pillar Two in the United States
The United States has not adopted its own Income Inclusion Rule (IIR), Undertaxed Profits Rule (UTPR), or Qualified Domestic Minimum Top-up Tax (QDMTT). Instead, the US federal tax system under the Internal Revenue Code of 1986 is recognised by the OECD/G20 Inclusive Framework as a Qualified Side-by-Side (SbS) Regime, with effect from fiscal years beginning on or after 2026-01-01.
Adoption status
Recognition applies to fiscal years beginning on or after the date shown.
Quick reference
| Rule | Effective date | Status |
|---|---|---|
| IIR — Income Inclusion Rule | — | Not adopted |
| UTPR — Undertaxed Profits Rule | — | Not adopted |
| QDMTT — Qualified Domestic Minimum Top-up Tax | — | Not adopted |
| Qualified SbS Regime | Fiscal years beginning on or after 2026-01-01 | Recognised OECD qualified |
Practical implications
MNE groups parented in the United States continue to be subject to existing US international tax provisions, including GILTI (Global Intangible Low-Taxed Income). With OECD recognition of the US federal tax system as a Qualified SbS Regime, taxes paid by the US group are taken into account when computing jurisdictional effective tax rates for Pillar Two purposes at the parent level. Because the US has not introduced its own IIR, top-up tax in respect of low-taxed foreign subsidiaries of a US MNE is typically collected through the QDMTT in the relevant subsidiary jurisdiction or, failing that, through the IIR/UTPR of jurisdictions where the group has constituent entities.
MNE groups with US subsidiaries are not directly subject to a US QDMTT (because the US has not introduced one). Where a US subsidiary is low-taxed for Pillar Two purposes, top-up tax is collected at the parent jurisdiction under the IIR, or allocated among UTPR jurisdictions where the group operates. Given the US 21% federal corporate tax rate and the GILTI overlay, it is not common for a US subsidiary's effective tax rate to fall below 15% for these purposes, but the result is fact-specific.
US — UTPR interaction. The United States previously considered retaliatory measures (Section 899) against jurisdictions imposing the UTPR on US groups. Section 899 was excluded from the final version of the One Big Beautiful Bill (OBBB) signed by President Trump on 2025-07-04, easing some of the friction between US groups and UTPR jurisdictions.
Recent legislative developments
- 2025-07-04: One Big Beautiful Bill (OBBB) signed by President Trump — Section 899 (anti-UTPR measure) excluded from the final law
- 2025-07-01 / 2025-07-03: Senate and House passed the OBBB without Section 899
- 2025-06-26: US Secretary of the Treasury recommended that Congress remove Section 899
Related terms
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- OECD Inclusive Framework — Updated Central Record for Purposes of the Global Minimum Tax, approved 2026-05-11 (current as at 2026-05-01). OECD Global Minimum Tax
- Internal Revenue Code of 1986 (Pub. L. 99–514, 100 Stat. 2085) — US federal tax code
- U.S. Department of the Treasury — official statements on Pillar Two. treasury.gov
- U.S. Congress — One Big Beautiful Bill (2025)
Disclaimer
This page is reference information prepared as of 2026-05-28 by synthesising the primary sources listed above, and is not legal or tax advice. Before applying any of this material in practice, please:
- Verify the latest US federal tax provisions and IRS guidance
- Obtain review by a qualified Pillar Two specialist
- Reassess applicability against the specific facts and circumstances of the group
Translation note. The authoritative version of this page is the Korean original (국가별 현황 › 미국). This English version is provided for accessibility and may not capture every nuance of the underlying sources. Where precision matters, please refer to the original legislation.