Ensuring Better Interest Treatment and Deductibility Act (EBITDA)
- Sponsor
- Rep. Estes, Ron [R-KS-4]
- Committees
- Ways and Means Committee (primary)
- Last action
- Mar 26, 2026
Bottom line
This bill aims to ease the limitation on business interest deductions by reverting to an earlier, more expansive definition of adjusted taxable income, potentially benefiting businesses with significant capital investments.
What it actually does
This bill amends Section 163(j)(8)(A) of the Internal Revenue Code of 1986 to repeal a specific modification to the definition of "adjusted taxable income" (ATI) for purposes of the limitation on business interest deductions. Specifically, it strikes clause (vi), which currently requires adding back depreciation, amortization, and depletion when calculating ATI. This change would effectively allow businesses to deduct more interest expenses by increasing their ATI, applicable to taxable years beginning after December 31, 2025.
Proponents argue
Proponents argue that the current limitation, which includes depreciation and amortization in the calculation of adjusted taxable income, unfairly restricts businesses' ability to deduct legitimate interest expenses, hindering investment, job creation, and economic growth. They contend that restoring the prior definition would provide much-needed tax relief, especially for capital-intensive industries, allowing them to reinvest more in their operations and expand.
Opponents contend
Opponents might argue that repealing this modification would reduce federal tax revenue, exacerbating the national debt, and primarily benefit larger corporations or those with high leverage. They may contend that the current limitation helps prevent excessive debt financing and ensures a fairer tax burden across different business structures, and that reverting the change would disproportionately favor certain industries or business models.
The bill text is very short and can be read quickly, but understanding its implications requires familiarity with complex tax code provisions.
Section 2(a)
Repeal of Modification to Adjusted Taxable Income Definition for Business Interest Limitation
This provision amends Section 163(j)(8)(A) of the Internal Revenue Code, which defines "adjusted taxable income" (ATI) for the purpose of limiting business interest deductions. By striking clause (vi), the bill removes the requirement that depreciation, amortization, and depletion expenses be added back when calculating ATI. This change effectively increases a business's ATI, thereby allowing it to deduct a larger amount of business interest expenses than currently permitted under the existing tax law.
Supporters argue
Supporters argue this change corrects an overly restrictive tax policy that discourages investment. They believe allowing businesses to fully deduct their interest expenses, especially when accounting for non-cash deductions like depreciation, better reflects economic reality and fosters capital formation and economic growth.
Critics contend
Critics might argue that this provision primarily benefits large, highly leveraged corporations and could encourage excessive debt financing. They may also point to the potential for significant revenue loss to the federal government, which could necessitate cuts elsewhere or increase the national debt.
Tradeoffs
The provision balances the goal of stimulating business investment and reducing tax burdens on capital-intensive industries against concerns about federal revenue loss and potentially incentivizing debt over equity financing.
The bill references "Public Law 119-21" as the source of the amendment being repealed. This implies a prior legislative action that modified Section 163(j)(8)(A) by adding clause (vi).
Section 2(a)
Why it matters:This is standard legislative practice for amending existing statutes by reference. It is not evasive, but it requires external research to fully grasp the specific change being made.
Case for: This method ensures precision in amending the tax code, directly targeting the specific language to be removed without re-stating the entire prior law, which can prevent unintended consequences.
Case against: For a layperson or even a non-specialist policymaker, it makes the bill's exact effect opaque without consulting external legal texts, increasing the barrier to understanding and transparency.
Estimated impact: The impact is on the clarity and self-containment of the bill text, requiring external reference for full comprehension, rather than a direct fiscal or policy impact.