H.R. 365 — Territorial Tax Parity Act of 2025

This section modifies sourcing rules for possessions income eligible for exclusion from U.S. gross income by bona fide residents of Guam, American Samoa, the Northern Mariana Islands, and the Virgin Islands, for taxable years beginning after December 31, 2024. (1) Income from services performed within Guam, American Samoa, or the Northern Mariana Islands is sourced within the possession only to the extent attributable to an office or fixed place of business within the United States (determined under the rules of IRC §864(c)(5)). (2) Special sourcing rules for sales of personal property under IRC §865(j)(3), previously applicable only to certain possessions (i.e., those under §931), now apply as well to the Virgin Islands (i.e., under §932).