Section 163(j) Business Interest Limit: EBITDA Is Back | HelloBooks Depreciation and amortization are added back to adjusted taxable income again from 2025. Who is exempt and how to rerun the Form 8990 math.
For tax years beginning after 2024, depreciation, amortization and depletion are added back when computing adjusted taxable income. Leveraged clients that were limited in 2022 to 2024 may now deduct more interest, and carryforwards may free up.
Free Plan with invoices within 200 transactions, bills & quotes — no credit card.
Small business exemption (2025 gross receipts test)
$31 million
Applies: Tax years beginning after 2024From IRS.gov · checked October 10, 2026
Under the 2022 to 2024 rules, adjusted taxable income was computed without adding back depreciation, amortization or depletion, which shrank the 30% limit for capital-heavy businesses. The Form 8990 instructions confirm those add-backs return for tax years beginning after 2024.
Businesses with average annual gross receipts of $31 million or less for 2025 remain exempt from the limit, subject to the usual tax shelter exclusion.
Pull every client that filed Form 8990 for 2022, 2023 or 2024.
The new computation leans on accurate depreciation and interest totals. Keep loan interest in its own expense account and record loan payments split between principal and interest rather than as a single outflow, so the Form 8990 inputs come straight from the trial balance.
General information for tax professionals, not advice on a specific return. Figures are from IRS.gov on the date shown; check the current IRS instructions before filing.
Free Plan with full access to the AI accountant — no credit card, no time limit.