IRS Loosens U.S. Tax-Break Rules for Corporate Debt Payments
- Rules address Congress’s expansion of tax breaks for debt
- Borrowers still face restrictions on deductions coming in 2022
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The U.S. Internal Revenue Service moved on Tuesday to ease the tax burdens of private equity portfolio companies and heavily indebted industries.
Under new rules, the IRS loosened a 2017 restriction that had capped tax deductions for debt interest payments at 30% of earnings before interest, taxes, depreciation and amortization, or EBITDA. The announcement reflects a temporary bump in the cap to 50% through year-end, as enacted by Congress in its March stimulus bill.