The Ensuring Better Interest Treatment and Deductibility Act would change how businesses can deduct interest expenses on their taxes. Specifically, the bill repeals a recent modification to the definition of "adjusted taxable income" that was used to limit business interest deductions under the tax code. This change would allow certain businesses—particularly larger corporations and partnerships—to deduct more interest expenses than they currently can under existing rules. The bill would take effect for tax years beginning after December 31, 2025. This legislation was introduced by a bipartisan group of Senate Republicans and would affect any business entity that pays significant amounts of interest on loans or debt.
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