Ensuring Better Interest Treatment and Deductibility Act (EBITDA)

Plain-English Summary: Ensuring Better Interest Treatment and Deductibility Act (EBITDA)

The Ensuring Better Interest Treatment and Deductibility Act, known by the acronym "EBITDA," is a bill that deals with how businesses can deduct interest expenses on their federal taxes. Currently, tax law limits how much interest expense a company can deduct, and those limits are calculated based on a measure of a company's income. This bill appears aimed at changing or restoring how that calculation is done — specifically, whether depreciation and amortization (accounting deductions for wear and tear on equipment and other assets) are included when figuring out the deduction limit, which would generally allow businesses to deduct more of their interest costs.

The bill would most directly affect businesses that carry debt and pay significant interest on loans — this includes a wide range of companies, from manufacturers and real estate businesses to retailers and energy companies. Allowing larger interest deductions would reduce the amount of taxable income these businesses report, potentially lowering their federal tax bills. Smaller businesses with less debt would likely feel little to no impact.

Because this bill has only been introduced and referred to the House Committee on Ways and Means — the tax-writing committee in the House — it is still in the very early stages of the legislative process. No committee votes or further action have been taken yet. The full text of the bill has not been made publicly available in detail, so the complete scope of its provisions is not yet known.