The U.S. Internal Revenue Service (IRS) moved on Tuesday to ease thetax burdens of private equity portfolio companies and heavilyindebted industries.

Prior to President Donald Trump's 2017 tax-code overhaul,interest expenses were generally fully deductible. The Trump taxlaw capped tax deductions for debt interest payments at 30 percentof EBITDA (earnings before interest, taxes, depreciation, andamortization).

The new arrangement, laid out in 575 pages, reflects a temporarybump in the cap, to 50 percent through year-end. In addition, theTreasury will no longer apply a limit on some transactions thatdon't officially take the form of a loan, but that potentiallycould be used to skirt the deduction cap. Included in thatclassification are debt-issuance costs, commitment fees, and somehedging gains and losses.

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including and

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.