Sponsors (4)
The bill eases and clarifies business interest deduction rules starting in 2026—benefiting many firms and simplifying IRS administration—at the cost of likely lower federal revenue and some transitional compliance disruption for taxpayers.
Businesses (including small businesses) will compute interest deductions under a simpler, reverted adjusted taxable income standard beginning in 2026, likely increasing deductible interest and reducing taxable income for many firms.
Taxpayers and financial institutions will face clearer statutory language that reduces ambiguity for IRS administration, easing compliance and audit guidance.
Taxpayers and the federal budget may face reduced tax revenue due to broader or larger interest deductions, which could increase budgetary pressure or require offsets.
Small businesses and taxpayers who planned under the post–Pub. L. 119–21 definition may incur tax‑planning disruption and one-time compliance costs to adjust to the reversion effective in 2026.
Based on analysis of 2 sections of legislative text.
Introduced March 26, 2026 by Shelley Moore Capito · Last progress March 26, 2026
Repeals a recent change to how "adjusted taxable income" is defined for the business interest deduction limit, restoring the prior calculation used to determine how much business interest expense can be deducted. The change applies to taxable years beginning after December 31, 2025, and does not create new agencies, appropriate funds, or add procedural deadlines.