Territorial Tax Parity and Fairness Act

House Votes

This bill changes how some federal tax rules apply to people who live in the U.S. Virgin Islands and own stock in Virgin Islands companies. If you are a bona fide resident of the Virgin Islands, and your dividends from a Virgin Islands company would count as Virgin Islands–sourced income, you would not be treated as a “U.S. person” for certain income calculations tied to that company. In plain terms, it aims to keep certain company income from being pulled into your U.S. federal taxes, aligning more with the Virgin Islands’ tax system.

The change would start for company tax years beginning after December 31, 2024 (and for the part of your tax year that lines up with those company years).

Key points:

• Who is affected: Bona fide residents of the U.S. Virgin Islands who own shares in Virgin Islands corporations.
• What changes: For certain federal tax calculations on company income, these residents won’t be treated as U.S. persons when the dividends would be sourced to the Virgin Islands.
• When: Effective for corporate tax years starting after December 31, 2024, and the matching parts of individuals’ tax years.