Changes to tax policy will make U.S. companies bring money back into the country, but Goldman Sachs expects them to spend a lot of it buying back stock rather than making capital expenditures.

"We expect tax reform legislation under the Trump administration will encourage firms to repatriate $200 billion of overseas cash next year," David Kostin, chief U.S. equity strategist, said in a Friday note, referring to companies in the S&P 500. "A significant portion of returning funds will be directed to buybacks based on the pattern of the tax holiday in 2004."

The new rules should add $150 billion to buybacks, or about 20 percent of an expected $780 billion in such stock repurchases next year, the Goldman report said. That would mark the second time in 20 years for which buybacks will account for the largest share of total cash use by S&P 500 companies, the note said.

"We expect firms will increase cash spending allocated to investing for growth (capex, R&D and M&A) by 6 percent to $1.3 trillion while cash returned to shareholders (buybacks and dividends) will rise by 19 percent to $1.2 trillion," Kostin said in the note.

President-elect Donald Trump has proposed cutting the business tax rate to 15 percent from 35 percent, and he says he wants a one-time 10 percent tax rate on repatriated corporate profits that are now held offshore.

Goldman economist Alec Phillips expects changes to tax policy to pass in the second half of 2017.

Large U.S. companies such as Apple have opened subsidiaries in Ireland, where the tax rate is 12.5 percent. U.S.-based companies do not need to pay U.S. taxes on the profits earned by those overseas operations until the earnings are brought back to the United States.

Note: As of September.

In September, Capital Economics said U.S. companies held $2.5 trillion overseas, nearly 14 percent of the total U.S. gross domestic product. S&P 500 companies have about $1 trillion in cash abroad, according to the Goldman note.

— CNBC's Jeff Cox contributed to this report.