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The Aug. 19 update splits the OBBBA's statutory rewrites from mere clarifications, and ends reliance on a 2020 proposed rule that let CFC income pad adjusted taxable income.
The Investor · Invest desk
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The IRS said on Aug. 19 that it had updated its frequently asked questions on the limitation on deducting business interest expense, issuing them as fact sheet FS-2026-14, which revises FS-2025-09 from last December [1][2]. For anyone underwriting debt, that document is the working text on Section 163(j), the rule that generally caps the deduction at 30% of adjusted taxable income and therefore decides how much of the interest bill is real [3].
The frame, as the fact sheet describes it: before the 2017 Tax Cuts and Jobs Act, 163(j) reached only certain interest paid or accrued by corporations [4]. The TCJA imposed the 30%-of-ATI limit starting in 2018, with carve-outs for businesses averaging $25 million or less in gross receipts over the three preceding tax years and for certain regulated utilities [3][5]. Investment interest and floor plan financing interest are also exempt, according to accounting firm Kahn, Litwin, Renza & Co. as cited in the report [6]. The CARES Act amended the section on March 27, 2020, and Treasury and the IRS finalised regulations in September 2020 and January 2021 [7][8].
The new material sits at the end. Of the fact sheet's 20 questions, the last two address the One, Big, Beautiful Bill Act [9]. Topic D has been rewritten from the FS-2025-09 version specifically to separate substantive changes in law from clarifications of existing law, and the fact sheet notes that its use of "change" refers to statutory language rather than to any change in the operative effect of the law [10]. That distinction is not cosmetic. A clarification carries the IRS position that nothing moved, and the agency says explicitly that the capitalisation clarification does not reflect a change in Treasury and IRS position [13].
Four items are listed [11]. The one that moves models: for tax years beginning after Dec. 31, 2024, depreciation, amortisation and depletion are added back to taxable income in computing ATI, having been excluded for years beginning after Dec. 31, 2021 and before Jan. 1, 2025 [12]. On a business with 100 of EBITDA and 30 of D&A, capacity goes from 21 to 30, roughly 43% more deductible interest, purely from the definition of the base [1].
Second, 163(j) applies to all business interest expense regardless of whether it would be deducted or capitalised under any mandatory or elective capitalisation provision, excluding only interest capitalised under sections 263(g) or 263A(f) [13]. Third, for tax years beginning after Dec. 31, 2025, CFC income inclusions under sections 951(a), 951A(a) and 78 come out of the ATI computation, so a U.S. shareholder can no longer lift ATI with a portion of those inclusions, and the September 2020 proposed regulations under Treas. Reg. 1.163(j)-7(j) can no longer be relied on for those years [14][15]. Fourth, the motor vehicle definition for floor plan financing interest now takes in trailers and campers designed for temporary living quarters and to be towed by or affixed to a motor vehicle, for tax years beginning after Dec. 31, 2024 [16].
Watch the promised rulemaking: Treasury and the IRS plan to issue guidance addressing these changes and clarifications, which is the gap borrowers with CFC structures are sitting in right now [17]. Also watch the second OBBBA question, which asks what effect the changes have; the published excerpt breaks off inside it [18].
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Ranked by verification strength, evidence, and original report placement.
The IRS said Aug. 19 that it has updated frequently asked questions about the limitation on the deduction for business interest expense.
The updated FAQs are available in fact sheet FS-2026-14, which revises FS-2025-09, issued last December.
Under the TCJA, starting in 2018, the deduction for business interest is generally limited to 30% of the taxpayer's adjusted taxable income (ATI) for the tax year.
Prior to the 2017 Tax Cuts and Jobs Act, Section 163(j) applied only to certain interest paid or accrued by corporations.
The limit does not apply to businesses with average annual gross receipts of $25 million or less for the three preceding tax years, nor to certain regulated utilities.
Investment interest and interest on floor plans (debt incurred to finance a dealer's purchase of motor vehicle inventory for sale or lease) are exempt from the limitation, according to information from top 100 accounting firm Kahn, Litwin, Renza & Co.
Evidence-backed comparisons of source perspectives and observed adoption signals. Read the methodology
Which Builder, Operator, and Investor concerns the observed source mix emphasized—not a truth score.
Evidence, demonstrated adoption, hype gap, incentives, and confidence are assessed independently, each on its own current evidence. How these are measured.
Primary text quoted, single outlet
The core assertions are traceable to verbatim reproduction of the IRS fact sheet's Topic D, including effective dates, the four OBBBA items, the reliance withdrawal and the Revenue Procedure 2026-17 pointer, which is strong documentary grounding. It is capped by having a single publisher, no linked copy of FS-2026-14 or Rev. Proc. 2026-17 in the supplied material, and one background detail sourced to an accounting firm rather than the statute.
Issuance documented, uptake unmeasured
The supplied source establishes only that the guidance was issued and that specific reliance was withdrawn. There is no evidence of taxpayer or practitioner behavior: no counts of affected filers, no disclosures of recomputed ATI or withdrawn excepted-business elections, and no indication of how many taxpayers had relied on Treas. Reg. sec. 1.163(j)-7(j).
Consequences understated
The coverage is procedural and makes no promotional claims, so there is no overstatement. It slightly understates: the depreciation/amortization add-back materially widens deductible interest capacity, and the CFC exclusion plus loss of reliance on a 2020 proposed regulation is a substantive planning reset for U.S. multinationals, yet both are presented as routine FAQ housekeeping with no sizing or affected-population discussion.
Mild trade-press and advisory pull
The issuing party is the IRS restating its own statutory reading, including an assertion that certain OBBBA language merely clarifies positions Treasury already held rather than changing them. The publisher is a gated CPA trade outlet whose article ends in a sign-in prompt for whitepapers, and one background passage is attributed to an accounting firm identified by its top-100 ranking, which is promotional framing. None of this materially distorts the quoted statutory content.
Solid on text, thin on consequence
High confidence in what the fact sheet says because it is quoted at length with dates and regulation cites; lower confidence overall because there is a single publisher, no corroborating outlet or direct citation to FS-2026-14 or Revenue Procedure 2026-17, no adoption measurement, and the published ledger recorded the excerpt as truncated where the supplied body in fact continues, indicating some capture noise.
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1 article · August 19, 2026