What is Business interest limitation?
In short
A business's deduction for net business interest expense is limited to business interest income plus 30% of adjusted taxable income (plus floor plan financing interest). Disallowed interest carries forward indefinitely.
Key takeaways
- Businesses with average annual gross receipts of $31,000,000 or less (2025) are exempt.
- From 2025, adjusted taxable income is again computed before depreciation and amortization, allowing a larger deduction.
- Real property businesses can elect out in exchange for slower depreciation.
Where it's tested
REG: Individual Taxation: Adjustments & Deductions — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
Under the One Big Beautiful Bill Act, what is the state and local tax (SALT) deduction cap, and is it permanent?