Ensuring Better Interest Treatment and Deductibility Act (EBITDA)

Summary of H.R. 8101 (119th Congress) — Ensuring Better Interest Treatment and Deductibility Act (EBITDA)

Purpose

H.R. 8101 aims to repeal a recent modification to the Internal Revenue Code that changed how adjusted taxable income is defined for purposes of the limitation on business interest under Section 163(j). The bill would return treatment to pre-2025 rules by removing the altered definition and restoring the prior framework. The short title of the bill is the “Ensuring Better Interest Treatment and Deductibility Act (EBITDA).”

Key Provisions

• Repeal of modified definition: The bill repeals the modification made to the definition of “adjusted taxable income” (ATI) for purposes of the Section 163(j) business-interest limitation. Specifically:
  • In IRC § 163(j)(8)(A), the bill inserts a “and” at the end of clause (iv) and strikes clause (vi) of the amended text, effectively undoing the accommodation that had been added.
• Effective date: The repeal would apply to taxable years beginning after December 31, 2025. In other words, the changes take effect for 2026 and later tax years.

Who Is Affected

• Taxpayers subject to the business-interest limitation (Section 163(j)): Corporations and other businesses that are subject to the limitation on interest deductions. The repeal changes how ATI is calculated for purposes of the limitation, and thus can affect the amount of deductible business interest for affected taxpayers.
• Taxpayers with recently modified ATI rules: Those who would have benefited from the 2025 and later modifications would revert to the pre-modification rules starting in 2026.

Procedural and Timeline Aspects

• Legislative status: Introduced in the House on March 26, 2026 by Rep. Estes, with numerous cosponsors. Referred to the Committee on Ways and Means.
• Next steps: If enacted, the repeal would be codified and applicable to taxable years beginning after December 31, 2025. This creates a 2026 tax year implementation through the 2029/2030 era depending on the taxpayer’s year and the in-force tax laws.

Practical Implications

• The repeal simplifies or restores the way ATI is treated under the business-interest limitation, likely increasing or modifying allowable interest deductions for some businesses starting in 2026.
• Taxpayers who were planning capital structures, financing strategies, or tax planning around the 2025-2026 transition may need to reassess in light of the return to the prior ATI framework.

Note

• The bill’s description focuses on repealing a specific modification to ATI under IRC § 163(j). It does not introduce new taxes or broaden the base beyond reinstating the prior treatment for the limitation on business interest.