Ensuring Better Interest Treatment and Deductibility Act (EBITDA)

Summary

Revises the tax code's test that limits how much business interest expense can be deducted by changing the definition of "adjusted taxable income" back to its prior form. The change undoes a recent amendment and applies to taxable years beginning after December 31, 2025, which will affect how businesses calculate allowable interest deductions on future tax returns.

• Reverses a recent amendment to the definition of "adjusted taxable income" used under section 163(j) of the Internal Revenue Code.
• Modifies the statutory text by inserting new language at the end of one clause and striking a different clause as previously amended.
• Affects how much business interest expense companies can deduct on their federal tax returns.
• Applies to taxable years beginning after December 31, 2025.
• Does not create new spending, programs, or reporting requirements beyond the tax-code change.
• Likely requires tax preparers and accounting software updates to reflect the restored definition.
• Impacts corporations and pass-through businesses differently depending on their interest expense and taxable income structure.
• No specific transition rules or temporary exceptions are included in the text.