Ensuring Better Interest Treatment and Deductibility Act (EBITDA)
- Bill Number
- H.R. 8101
- Origin Chamber
- House
- Congress
- 119th Congress, Session 2
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2026-03-26: Referred to the House Committee on Ways and Means.
- Last Updated
- 2026-06-25T08:07:42Z
AI-Generated Summary
Purpose
The Ensuring Better Interest Treatment and Deductibility Act (EBITDA) aims to repeal a recent change to how adjusted taxable income (ATI) is calculated under the U.S. tax code. ATI is used to limit how much business interest (interest paid on business loans) companies can deduct from their taxes. This bill restores the prior definition of ATI, likely allowing businesses to deduct more interest.
Key Provisions
- Amends Section 163(j)(8)(A) of the Internal Revenue Code of 1986.
- Adds "and" at the end of clause (iv).
- Deletes clause (vi), which was added by Public Law 119-21.
- Applies to taxable years beginning after December 31, 2025.
Significant Changes to Existing Law
- Reverses a modification made by Public Law 119-21 to the ATI definition.
- ATI determines the cap on deductible business interest (generally 30% of ATI plus some other amounts).
- Prior to the modification, ATI was likely based on EBITDA (earnings before interest, taxes, depreciation, and amortization—a broader measure); the change being repealed narrowed it, possibly to EBIT (earnings before interest and taxes), limiting deductions.
Potential Impacts
- Businesses: Could deduct more interest expenses, lowering taxable income and tax bills, especially for debt-heavy industries like real estate or manufacturing.
- Government: Likely reduces federal tax revenue as businesses pay less in taxes.
- Citizens/Taxpayers: Indirect benefits for business owners and shareholders via higher after-tax profits; minimal direct impact on individuals.
- No clear effects on international relations.
Main Stakeholders Affected
- Businesses: Primary beneficiaries, particularly those with significant interest expenses.
- U.S. Treasury/IRS: Must implement changes and face potential revenue loss.
- Taxpayers and shareholders: Gain from corporate tax savings.
- Introduced by Representatives: Ron Estes (KS) and co-sponsors, mainly Republicans focused on tax relief.
Notable Legal, Constitutional, or Political Implications
- Legal: Straightforward tax code amendment; no challenges to constitutionality expected as it follows standard legislative process.
- Political: Signals pushback against recent tax restriction (Public Law 119-21), favoring business-friendly deductions; referred to House Ways and Means Committee for review.
- No broader constitutional issues; aligns with Congress's taxing power under Article I.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (19)
Rep. Smith, Adrian [R-NE-3], Rep. Hern, Kevin [R-OK-1], Rep. Kustoff, David [R-TN-8], Rep. Moore, Blake D. [R-UT-1], Rep. Feenstra, Randy [R-IA-4], Rep. Miller, Carol D. [R-WV-1], Rep. Miller, Max L. [R-OH-7], Rep. Moran, Nathaniel [R-TX-1], Rep. Arrington, Jodey C. [R-TX-19], Rep. LaHood, Darin [R-IL-16], Rep. Buchanan, Vern [R-FL-16], Rep. Tenney, Claudia [R-NY-24], Rep. Carey, Mike [R-OH-15], Rep. Yakym, Rudy [R-IN-2], Rep. Van Duyne, Beth [R-TX-24], Rep. Moolenaar, John R. [R-MI-2], Rep. Pfluger, August [R-TX-11], Rep. Fischbach, Michelle [R-MN-7], Rep. Murphy, Gregory F. [R-NC-3]
Recent Actions
- 2026-03-26: Referred to the House Committee on Ways and Means.
- 2026-03-26: Introduced in House
- 2026-03-26: Introduced in House
Bill Versions
- Ensuring Better Interest Treatment and Deductibility Act (EBITDA) — issued 2026-03-26 — PDF (2 pages)