IRS Loosens U.S. Tax-Break Rules for Corporate Debt Payments

The U.S. Internal Revenue Service moved on Tuesday to ease the tax burdens of private equity portfolio companies and heavily indebted industries.

Under new rules, the IRS loosened a 2017 restriction that had capped tax deductions for debt interest payments at 30% of earnings before interest, taxes, depreciation and amortization, or EBITDA. The announcement reflects a temporary bump in the cap to 50% through year-end, as enacted by Congress in its March stimulus bill.

Prior to President Donald Trump’s 2017 tax-code overhaul, interest expenses were generally fully deductible.

With the new arrangement, laid out in 575 pages, the Treasury ...