H.R. 7559 — To amend the Internal Revenue Code of 1986 to deny deduction for outsourcing payments.

This section establishes new IRC §280I to deny income tax deductions for outsourcing payments made after December 31, 2025, in taxable years ending after such date. Outsourcing payments are any premium, fee, royalty, service charge, or other payment made in the course of a trade or business to a foreign person (i.e., any non-U.S. person, excluding corporations or partnerships organized under the laws of a U.S. possession) for labor or services benefiting U.S. consumers; for mixed payments partly benefiting non-U.S. consumers, the nondeductible portion is prorated based on the share of labor or services directed to U.S. consumers. The Secretary must issue regulations and guidance to prevent avoidance or abuse, including through transfer pricing arrangements.