S 4221
Ensuring Better Interest Treatment and Deductibility Act (EBITDA)
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Bill overview
This bill, the Ensuring Better Interest Treatment and Deductibility Act (EBITDA), aims to modify how interest expenses are treated for tax purposes. Specifically, it repeals a provision in the Internal Revenue Code that limited the deductibility of business interest based on adjusted taxable income. This change is intended to make it easier for businesses to deduct interest expenses, potentially boosting investment and economic activity. The changes will take effect starting in 2026.
Key provisions
- Repeals a section of the Internal Revenue Code (163(j)(8)(A)) that limited business interest deductions.
- Specifically targets the provision modified by Public Law 119-21.
- Removes a clause related to adjusted taxable income calculations for interest deduction limitations.
- The changes will apply to tax years beginning after December 31, 2025.
Who is affected
- Businesses
- Taxpayers
- Corporations
Notable changes
- Increases the potential for business interest deductions.
- Alters the calculation of adjusted taxable income for tax purposes.
Fiscal impact
This bill could potentially increase tax revenues for the federal government due to increased business interest deductions.
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119th CONGRESS — 2d Session
S. 4221
IN THE SENATE OF THE UNITED STATES
A BILL
To amend the Internal Revenue Code of 1986 to repeal the modification of the definition of adjusted taxable income for purposes of the limitation on business interest.
This Act may be cited as the Ensuring Better Interest Treatment and Deductibility Act (EBITDA)
.
Section 163(j)(8)(A) of the Internal Revenue Code of 1986, as amended by Public Law 119–21, is amended by inserting and
at the end of clause (iv) and by striking clause (vi).
The amendments made by this section shall apply to taxable years beginning after December 31, 2025.