Sponsor
Shelley Moore Capito
Senator · R-WV
Senator · R-WV
The bill gives businesses clearer, permanent ability to deduct depreciation/amortization under the section 163(j) interest limit—improving cash flow and planning—while reducing federal revenue, advantaging capital‑intensive firms, and requiring IRS administrative updates.
Businesses (including small businesses and taxpayers) can permanently deduct depreciation, amortization, or depletion when applying the section 163(j) business interest limitation, preserving interest deductibility, lowering taxable income for capital-intensive firms, and freeing cash flow for reinvestment.
Taxpayers and financial institutions gain clearer, more predictable tax treatment for taxable years after 2021, reducing compliance uncertainty and simplifying tax planning and preparation.
Permanently allowing these deductions reduces corporate and business tax revenue, which could increase the federal deficit or crowd out other spending priorities.
Larger interest deductions can advantage capital-intensive or better-capitalized firms over smaller or less-capitalized competitors, potentially skewing competition and harming some small businesses.
The Treasury/IRS will need to issue guidance and update tax forms and systems, creating administrative costs and short-term compliance burdens for federal agencies, preparers, and taxpayers.
Based on analysis of 2 sections of legislative text.
Permanently allows depreciation, amortization, and depletion to be included when calculating the Section 163(j) business interest limitation.
Makes permanent a tax rule that lets businesses include depreciation, amortization, and depletion when calculating the limit on deductible business interest. It removes the temporary cutoff that had restricted that allowance for tax years beginning before January 1, 2022, and applies the permanent change to taxable years beginning after December 31, 2021.
Official title: Amend the Internal Revenue Code of 1986 to permanently extend the allowance for depreciation, amortization, or depletion for purposes of determining the income limitation on the deduction for business interest.
Introduced February 13, 2025 by Shelley Moore Capito · Last progress February 13, 2025