Among the headline changes is a proposed incremental tax hike on income earned by residents of countries with “unfair tax regimes”, starting at 5% and rising to 20%. The implications for multinational companies and globally mobile individuals could be substantial — especially without forward planning.
“This isn’t just a headline change — it’s a significant concern for global employers and employees,” said David Livitt, Partner at Blick Rothenberg.
Who could be affected?
The proposed changes would affect a wide range of internationally connected individuals and businesses, including:
- Former US residents with US-sourced income: Those who continue to receive bonuses, stock payouts, or deferred compensation after leaving the country may face higher tax rates, despite no longer being resident.
- Employees on tax equalisation plans: These plans, common in global mobility programs, ensure the employer covers the tax bill for overseas assignments. If tax rates go up, assignment costs increase — potentially undermining the viability of future international postings.
- Employees moving to the US mid-year: People relocating to the US partway through the year may not gain full tax residency immediately, exposing part-year income to higher tax rates.
- Employees leaving the US at year-end: Those who depart during a tax year might find income earned post-departure, such as stock vesting or bonuses, taxed at elevated rates.
“These rules mean individuals could be taxed more harshly simply based on the timing of income — or where they live when it’s paid,” Livitt explained. “In many cases, it’s the employer who foots the bill through tax equalisation.”
What can companies do?
Livitt stressed the importance of early planning, urging companies to take a proactive approach before the new tax regime potentially kicks in by 2026.
Key recommendations include:
- Timing payments wisely: Advance bonus or stock payments into 2025, ahead of the higher rates. This is especially useful for employees relocating or receiving trailing income.
- Review stock vesting schedules: Where RSUs or stock options are set to vest in early 2026, consider accelerating them into 2025 to avoid triggering higher marginal rates or additional foreign income surtaxes.
- Consider alternative stock compensation: Issuing Incentive Stock Options (ISOs) could be a more tax-efficient method than non-qualified options, though companies must factor in alternative minimum tax implications.
- Defer income past 2026 (where feasible): For employees entering lower-tax phases — such as post-assignment or post-retirement — deferring income could mitigate exposure.
- Maximise tax-efficient benefits: Making the most of employer-sponsored tax-sheltered plans can shield more income in high-tax years, easing the burden for both employee and employer.
Act now, plan ahead
“These proposed changes could have a significant impact on mobile workforces and highly compensated employees,” Livitt concluded. “Now is the time for proactive planning to stay ahead of what could be a very different tax landscape in 2026.”
With Trump’s tax package gaining political traction, companies with globally mobile teams may need to rethink how they structure compensation, plan assignments, and manage tax risk — or risk facing unexpected financial and compliance challenges in the years ahead.
Jamie Young
Jamie Young is Senior Reporter at Business Matters, covering SME finance, employment law and Westminster policy since 2016. He has reported on every Budget and Autumn Statement since 2018, helped make sense of the 'covid era' and the bounce-back loan scheme from launch through the fraud investigations, and broke the magazine's coverage of the 2024 late-payment reforms. He joined Business Matters straight from completing his BA in Administration from Exeter University and is NCTJ-qualified. Reach him at jyoung@cbmeg.co.uk
