ABI Joins Letter to Treasury on Business Interest Deductions
March 14, 2019
One of ABI’s national partners, the National Association of Manufacturers (NAM), alerted us to an issue at the federal level that could make it more expensive for manufacturers to purchase machinery and equipment. ABI joined other associations and companies around the country in a letter requesting the Treasury Department to change the proposed regulations so as not to stifle manufacturing growth. According to the NAM, the Treasury Department has advanced tax reforms relating to limiting business interest deductions. This would increase the cost of doing business for manufacturers.
These are the implications of the current rule as stated in the NAM blog post on their website: "The Tax Cuts and Jobs Act limited business interest deductions to 30 percent of earnings before interest, tax, depreciation and amortization or EBITDA for tax years starting in 2018 through 2021. However, starting in 2022, the deduction is limited to 30 percent of earnings before interest and tax or EBIT. By excluding depreciation and amortization, the stricter EBIT standard reduces the maximum deduction available to manufacturers thus making it more expensive for capital intensive businesses to finance capital equipment purchases. Unfortunately, the Treasury Department recently proposed rules that harm manufacturers by effectively implementing the EBIT standard years earlier than intended."
Read the full comments from the NAM to Treasury.