America cut its taxes. You're still paying European rates.

The US tax reform of 2017, officially the "Tax Cuts and Jobs Act of 2017", fundamentally changed how businesses are taxed in the USA and delivers a number of real advantages, especially for the self-employed and for companies. Since then, business taxes in the USA have in some cases been lower than in Switzerland. This page explains what the package brought and what of it still applies in 2026.

The biggest winners of these sweeping tax cuts are entrepreneurs living in the USA and owners of corporations and partnerships. But even if you don't live in the USA and run a business there (or plan to), the reform has a significant impact on you.

So on this page we look at the key advantages of the new law for international owners of US businesses who are not resident or taxable in the USA. And if you're not yet active in the US market, the reform may be one more reason to make the leap across the Atlantic.

All the tax advantages described here apply from 2018, some even retroactively from 2017. Update 2026: Most of these rules would have expired at the end of 2025; the One Big Beautiful Bill Act (OBBBA) of July 4, 2025 made them permanent and adjusted some rates. You can read our take on the package in our One Big Beautiful Bill analysis.

Note: All the tax cuts described here concern US federal taxes only. Most US states levy their own state income and corporate taxes, which the reform does not affect. So the state where your company is based, or where you as the owner live in the USA, also needs to be taken into account.

1Advantage 1: Corporate tax cut from 35% to 21%

Until 2017, the USA was considered a high-tax country with the highest corporate tax rates of any industrialized nation. From 2018, that changed overnight. The corporate tax cut benefits entrepreneurs who run a US corporation earning more than $75,000 in profit a year.

We form your US C Corporation in one of six states and look after it on an ongoing basis, tax matters included. Learn more about the US C Corporation.

2Advantage 2: A deduction of up to 20% on partnership profits

If you run a commercial partnership in the USA (for example a Limited Partnership; the LLC can only be recommended with reservations), under the tax treaty the profits are taxed in the USA but not at home (subject to progression).

Since 2018, a deduction of up to 20% applies to partnership profits (the Qualified Business Income Deduction under IRC § 199A, made permanent by the One Big Beautiful Bill Act in 2025). For 2026, the thresholds are $201,750 for single filers and $403,500 for married couples filing jointly (Rev. Proc. 2025-32).

The formula above applies in full, however, only to people with total US income of up to $201,750 (2026, single filers). If your annual share of partnership profit is higher, or you have other US income that takes your taxable US income above this threshold, restrictions apply.

The deduction then depends on the total wages the business pays or on the investments it makes in the tax year.

Here's an example with a very high profit:

Further restrictions apply to certain service providers such as consultants, lawyers and doctors, who benefit from the lower rates only to a limited extent, to prevent abuse.

The bottom line: for tax purposes, a partnership can be a more attractive structure for your US expansion than a C Corporation. What matters is that your country of residence recognizes it as a commercial business.

We form your US Limited Partnership in one of six states and look after it on an ongoing basis, tax matters included. Learn more about the US Limited Partnership.

3Advantage 3: The switch to a territorial tax system

By switching to a territorial tax system, the USA has aligned itself with the standard in every other G7 country.

Until then, profits of, say, an Irish subsidiary of a US company were first taxed in Ireland at 12.5% and then taxed again in the USA at up to 35% (with a credit for the tax already paid in Ireland).

Now the USA does what the EU has long done (the EU Parent-Subsidiary Directive): profits already taxed in foreign subsidiaries and branches are no longer taxed again in the USA when paid out to the parent company. The condition, however, is that the profits were genuinely earned abroad and not with US customers.

Gains a US company makes on selling a foreign shareholding are also tax-exempt.

The well-known CFC rules and substance requirements for foreign subsidiaries still apply.

3.1GILTI: Favorable US taxation of CFC income

Here's the real highlight: profits of subsidiaries in offshore jurisdictions and low-tax countries ("global intangible low-taxed income", GILTI) may be subject to additional US tax, but at a reduced rate instead of the standard 21% corporate rate: since 2026 it has been around 12.6% (under the OBBBA the regime is now called "Net CFC Tested Income", NCTI; until 2025 it was 10.5%). Since 2026, 90% of taxes paid abroad can be credited (previously 80%).

The reduced rate, however, applies to a group's total foreign profit. So if a US company has, for example, a European subsidiary and another in the Bahamas, both earning the same profit, the high tax paid in Europe offsets the tax-free profit in the Bahamas, and no additional US tax is due.

We form your US C Corporation in one of six states and look after it on an ongoing basis, tax matters included. Learn more about the US C Corporation.

4Advantage 4: IP box & foreign income from intellectual property taxed at around 14%

In recent years, a number of countries have tried their hand at a so-called IP box or patent box: the UK, Ireland and Luxembourg are just a few examples. The idea is to tax income from intellectual property at a lower rate than ordinary business income.

For an IP box to be legitimate, the OECD sets fairly strict design requirements. For instance, the intellectual property must have been developed locally. Some countries also specify that only patented intellectual property qualifies for the IP box.

The US IP box ("innovation box"), available to US corporations since 2018, is far more flexible: the law sets a reduced corporate tax rate on foreign income from IP, currently 14% since 2026 (under the OBBBA the regime is now called FDDEI; originally 13.125%). The IP does not have to be developed in the US, and it does not have to be patented.

In fact, the term IP is defined very broadly and can mean branding, software, goodwill and intangible assets in general.

We form your US C Corporation in one of six states and look after it on an ongoing basis, tax matters included. Learn more about the US C Corporation.

5Advantage 5: Profits from exports of services and goods are taxed at around 14%

This follows directly from the previous point: because IP is defined so flexibly, this tax break effectively means that income from services and exports of all kinds to non-US customers is taxed at only around 14% (until 2025: 13.125%).

So a US corporation with customers in, say, the EU pays only around 14% corporate tax on income from goods and services delivered to those customers.

That is a major advantage for international entrepreneurs in the US who want to use a US company not just to win the American market, but to serve customers around the world from there.

We form your US C Corporation in one of six states and look after it on an ongoing basis, tax matters included. Learn more about the US C Corporation.

6Advantage 6: 100% immediate expensing for many capital goods

If you are planning business investments such as equipment and machinery, you can write them off immediately, deducting them as business expenses. The originally temporary 100% immediate expensing was made permanent by the OBBBA for assets acquired after January 19, 2025. Real estate purchases are expressly excluded.

7Advantage 7: Tax deferral when employees exercise stock options

Tech entrepreneurs in particular will be glad to hear that since 2018 they can reward US employees with stock options without those employees taking an immediate tax hit.

Previously, the discount US employees received on the market price of their company's stock when exercising an option was taxable as income the moment they exercised it.

Example: by exercising the option, your employee can buy a share in your company for $1, even though it is worth $5. Until now, the $4 difference was taxable immediately.

Since the reform, the employee can elect (Section 83(i)) to defer the tax on exercise, provided the employer is not publicly traded and grants options to at least 80% of its US employees. The tax on the difference between the option price and the actual value of the stock is then deferred, for a maximum of five years and only until the shares become transferable or publicly traded.

The taxation of sale proceeds is unaffected by the change, since those are taxed separately anyway when the shares are sold.

8Our assessment and our recommendation

If you have built a successful business and are wondering how to keep growing, expanding into the US deserves a serious look. The US is a huge, uniform market with enormous growth potential.

And with the tax advantages described here, America becomes an even more attractive future market for your business.

If you are tired of the EU, expanding into the US may well take less effort than pushing further into markets like France, Spain and Italy.

The reform's relief for international businesses, meaning those with customers outside the US, makes the US an attractive company location that will compete with countries like Ireland in the medium term.

9How Mount Bonnell Advisors can support your plans in the US

Mount Bonnell Advisors has been forming and managing US companies since 2008, with our own office in the US since 2008.

You will find few websites that cover US tax topics in as much detail as ours. We advise clients on every aspect of forming a company and taking up residence in the US.

Our combination of theory and hands-on practice is unmatched. From our office in Austin, TX, we guide clients as they expand their businesses into the US and give them real, practical support with all their other US tax matters.

In short

• The 2017 US tax reform cut the federal corporate tax rate from 35% to 21%. The One Big Beautiful Bill Act of July 4, 2025 made most of the rules permanent.
• Profits from pass-through entities qualify for a deduction of up to 20% under Section 199A, with limits above the thresholds.
• Profits of foreign subsidiaries are generally no longer taxed again when distributed to the US parent. Since 2026, subsidiaries in low-tax countries face a top-up tax of around 12.6%.
• Since 2026, income from goods and services sold to non-US customers has been taxed at around 14%, and many capital goods can be fully expensed right away.
• All the cuts apply to federal taxes only. State taxes come on top.

How we help you

• Tax structureA clean structure between parent company and US subsidiary, or between you and your US company, coordinated with your accountant.
• Corporation tax returnForm 1120 and Form 5472 for your US corporation.
• LLC and LP Tax ReturnForm 1065 and K-1 for your LLC or LP.
• US Tax ConsultationYour US tax question, answered by people who know both sides.