Can a borrower deduct full interest or is there a limitation?
September 10, 2024
by an intermediary from The University of Chicago - Booth School of Business in Chicago, IL, USA
Current tax laws discourage high leverage. TMK, starting 2022, law limits interest deduction to 30% of EBIT. Earlier, from 2018 to 2021, the limit was 30% of EBITDA. Before 2018, there was no limit on interest deduction.
Has anyone been impacted by these interest limitations?
from Michigan State University in Ann Arbor, MI, USA
If I’m not mistaken 1120 and 1120s under $27 million revenue are exempt from limitation; and in 2024 the limitation formula reverted back to EBITDA. (In certain cases, i think you may be able to amend ‘22 and;’23 applying the EBITDA formula).
if you do have a limitation, the unused interest deduction can be carried forward.
CYA- consult your tax advisor.
from Northwestern University in Chicago, IL, USA