38 for the taxable year which is properly allocable to the research credit determined under section 41(a). (2) Modifications for taxable years beginning after 2025 In the case of any taxable year beginning after December 31, 2025, paragraph (1) shall be applied— (A) by substituting 12.5 percent for 10 percent in subparagraph (A) thereof, and (B) by reducing (but not below zero) the regular tax liability (as defined in section 26(b)) for purposes of subparagraph (B) thereof by the aggregate amount of the credits allowed under this chapter against such regular tax liability rather than the excess described in such subparagraph. (c) Modified taxable income For purposes of this section— (1) In general The term modified taxable income means the taxable income of the taxpayer computed under this chapter for the taxable year, determined without regard to— (A) any base erosion tax benefit with respect to any base erosion payment, or (B) the base erosion percentage of any net operating loss deduction allowed under section 172 for the taxable year. (2) Base erosion tax benefit (A) In general The term base erosion tax benefit means— (i) any deduction described in subsection (d)(1) which is allowed under this chapter for the taxable year with respect to any base erosion payment, (ii) in the case of a base erosion payment described in subsection (d)(2), any deduction allowed under this chapter for the taxable year for depreciation (or amortization in lieu of depreciation) with respect to the property acquired with such payment, and (iii) in the case of a base erosion payment described in subsection (d)(3), any reduction in gross receipts with respect to such payment in computing gross income of the taxpayer for the taxable year for purposes of this chapter. (B) Tax benefits disregarded if tax withheld on base erosion payment (i) In general Except as provided in clause (ii), any base erosion tax benefit attributable to any base erosion payment— (I) on which tax is imposed by section 871 or 881, and (II) with respect to which