Before 2022, businesses could deduct 30% of their earnings before interest, tax, depreciation, and amortization (EBITDA). Currently, they’re required to calculate their interest expense deductions based on the more stringent earnings before interest and taxes (EBIT) standard. Businesses affected by the change are estimated to see, on average, close to a threefold increase in their incremental tax obligations. The U.S. Chamber of Commerce said the change “risks reduced investment, slower job creation, smaller wage increases and lower overall economic growth.” A recently introduced bipartisan bill, the American Investment in Manufacturing Act, would reinstate the EBITDA standard. Stay tuned.
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