Growing and Preserving Innovation in America Act of 2025

This bill, HR1062, directly prevents a scheduled tax increase for U.S. corporations with significant international intellectual property and sales by making permanent the higher tax deduction rates for foreign-derived intangible income (FDII) and global intangible low-taxed income (GILTI). The current law dictates a reduction in these deductions starting in 2026, which would increase the effective tax rate for companies earning profits from intellectual property abroad. By repealing this scheduled reduction, the bill ensures these companies maintain their current, more favorable tax treatment, directly improving their bottom lines. The money trail here is straightforward: it is a tax benefit. Companies that generate substantial revenue from intellectual property (IP) sold or licensed internationally will retain more of their foreign earnings. This is not a grant or a contract, but a direct increase in net income due to lower tax liabilities. The mechanism is regulatory relief through the tax code. Companies with significant foreign-derived intangible income, particularly in sectors like technology, pharmaceuticals, and consumer brands, are positioned to benefit. Historically, changes to corporate tax rates have a direct and measurable impact on stock valuations. For example, the Tax Cuts and Jobs Act of 2017, which significantly lowered the corporate tax rate from 35% to 21%, led to a broad market rally. While not directly comparable in scale, maintaining a favorable tax rate for foreign-derived income avoids a negative market reaction that would otherwise occur if the scheduled tax increase took effect. The market generally prices in expected tax changes, so preventing a scheduled increase is a positive catalyst, or at minimum, prevents a negative one. Specific winners include large multinational corporations with extensive intellectual property portfolios and significant international sales. Companies like Microsoft ($MSFT), Apple ($AAPL), Alphabet ($GOOGL), Amazon ($AMZN), Johnson & Johnson ($JNJ), Pfizer ($PFE), Procter & Gamble ($PG), and Coca-Cola ($KO) are prime examples. These companies derive substantial portions of their revenue from foreign markets through patented technologies, branded products, and licensed software. There are no direct losers from this bill; rather, the absence of its passage would result in a loss for these companies due to increased tax burdens. The bill was introduced on February 6, 2025. Its passage would take effect on the date of enactment. Given the bipartisan sponsorship (Feenstra, R-IA-4, and Morelle, D-NY-25) and the benefit to major U.S. corporations, the bill has a reasonable chance of moving through the legislative process. The key timeline is before the end of 2025, when the current favorable tax rates are set to expire.