Section 163(j) - What updates were made to the tax treatment of electively capitalized interest starting in 2026?
Businesses that previously elected to capitalize interest (such as real property or farming businesses) must include capitalized interest amounts in the 163(j) deduction limitation before including any business interest which would be expensed prior to the limitation.
This update removes a planning strategy to electively capitalize interest which previously allowed some businesses to optimize interest expense deductions..
OBBBA introduces flexibility to revoke or modify prior elections with IRS consent.
Provides new safe-harbor methods for allocating capitalized interest across projects.
Social Media
Contact Us
Interested in learning more about what Kerkering Barberio has to offer? Start your journey now by sharing your information in our inquiry form.
