Sponsors (15)
The bill clarifies how adjusted taxable income is calculated for the business interest limitation—improving predictability and IRS administration—but may raise tax bills for some firms and impose new compliance costs.
Businesses (taxpayers and financial institutions) will have clearer statutory rules for calculating 'adjusted taxable income' beginning in 2026, reducing tax uncertainty and making corporate tax planning more predictable.
Taxpayers will benefit from an updated statutory rule that helps the IRS administer and enforce the interest limitation more consistently, potentially reducing disputes and uneven audit outcomes.
Businesses (taxpayers and financial institutions) may face higher tax liabilities if the new definition narrows deductible interest, increasing costs for affected firms.
Taxpayers and tax preparers will incur additional compliance costs to understand and implement the amended calculation starting in 2026.
Based on analysis of 2 sections of legislative text.
Revises the Internal Revenue Code definition of 'adjusted taxable income' used to limit business interest deductions, by inserting language at one clause and striking another.
Amends the Internal Revenue Code definition of “adjusted taxable income” used to calculate the business interest deduction limit by inserting new text at the end of one clause and removing another clause added by a prior law. The change applies to taxable years beginning after December 31, 2025. The bill also includes a provision that designates a short title for the Act.
Introduced March 26, 2026 by Ron Estes · Last progress March 26, 2026