Summary

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.

Key Points

• Reverses a recent statutory change to the definition of "adjusted taxable income" used in the business interest deduction limit (section 163(j)).
• Restores the prior method for calculating adjusted taxable income for interest-deduction purposes.
• Effective for taxable years beginning after December 31, 2025.
• Does not create new spending, agencies, or administrative deadlines.
• Directly affects businesses that incur and deduct interest expense and the tax calculations used by the IRS and preparers.
• Is a narrow, targeted change to the Internal Revenue Code rather than a broad tax or budget overhaul.
• Gives taxpayers and administrators time to adjust because the effective date is not immediate.
• May change deductible interest amounts and therefore taxable income and tax liability for affected businesses starting in the 2026 tax year.

Categories & Tags