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March 16, 2023

International policy changes represent nearly 30% of total tax increases in President Biden's FY2024 budget

On March 9, 2023, the Biden Administration released its FY2024 budget, which includes over $4 trillion in net tax increases over the next 10 years. Over $1.1 trillion, or 29% of the increases in total net tax, comes from reforms to international tax rules. These changes could significantly increase the tax liabilities faced by US multinational companies and could make the US compliant with minimum taxation rules under Pillar Two of the Base Erosion and Profit Shifting (BEPS) initiative of the Organisation for Economic Co-operation and Development (OECD)/G20 Inclusive Framework.

Table 1. President's FY2024 Budget top tax proposals (2024–2033)



estimate ($ bil)

% of total


Total international tax increases



Adopt the undertaxed profits rule



Revise the global minimum tax regime, limit inversions, and make related reforms



Repeal the deduction for foreign-derived intangible income*



Provide additional support for research and experimentation expenditures*



Reform taxation of foreign fossil fuel income



Restrict deductions of excessive interest of members of financial reporting groups



Other international net tax increases




Total other net tax increases




Total net tax increases



*The revenue raised from repealing the deduction for foreign derived intangible income is explicitly allocated to provide additional support for research and experimentation expenditures.

Source: US Department of the Treasury, General Explanations of the Administration's Fiscal Year 2024 Revenue Proposals, March 9, 2023; EY analysis.

The FY2024 budget would repeal the current base erosion anti-abuse tax (BEAT) and replace it with an undertaxed profits rule (UTPR) that would be consistent with the Pillar Two Model Rules adopted by the OECD/G20 Inclusive Framework. The proposal would include a mechanism to allow US taxpayers to still benefit from tax credits and incentives. The FY2024 budget estimates that this provision would raise $549 billion, or 14% of the total net tax increases, over the next 10 years.

The FY2024 budget would also reform the global intangible low-taxed income (GILTI) regime. GILTI requires a minimum rate of tax to be paid by US-based multinationals on the income of their controlled foreign corporations. The budget contains multiple reforms; among those reforms, it would increase the effective GILTI tax rate and require the global minimum tax to be calculated on a country-by-country basis. The FY2024 budget estimates this provision would raise $493 billion, or 12% of the total net tax increases, over the next 10 years. Although not identical, EY QUEST has analyzed how changes to GILTI in past presidential budgets could affect US domestic activity.

The FY2024 budget would repeal the deduction on foreign-derived intangible income (FDII). Repealing the FDII deduction would raise nearly $116 billion, or 3% of the total net tax increases, over the next 10 years. Although a tax increase, the budget specifies that the revenue raised from this repeal would be allocated to encourage research and development (R&D) elsewhere, without specifying which R&D incentives it would fund.

As part of its reform of foreign fossil fuel income, the FY2024 budget would limit the amount of foreign tax credit a multinational could claim if it also receives a specific economic benefit from the foreign country where it conducts operations. In addition, the budget would repeal current rules that confer a preferential treatment on oil and gas producers. These provisions would raise over $66 billion, or 2% of the total net tax increases, over the next 10 years.

The FY2024 budget would further restrict the business interest expense deduction. The administration argues that the restrictions would limit a multinational's ability to reduce US taxable income through high interest-to-income ratios for US operations. The FY2024 budget estimates that this would increase revenue by over $41 billion, or 1% of the total net tax increases over the budget window.

Historically, only a fraction of a president's budget becomes law. Still, it often serves as a starting point for discussions with the Congress, as seen last year with the Inflation Reduction Act. Companies, industry groups and other participants in the policy debate should focus their attention on these international tax reforms, as they could preview what OECD/G20 Pillar Two compliant rules could look like in the United States and may feature prominently in debates on Capitol Hill, foreign relations and the upcoming 2024 presidential campaign.


Contact Information
For additional information concerning this Alert, please contact:
Quantitative Economics and Statistics Group
   • Robert Carroll (
   • Brandon Pizzola (
   • AJ McKeown (

Published by NTD’s Tax Technical Knowledge Services group; Jennifer A Brittenham, legal editor