The below sample shows the first five states in alphabetical order included in the matrix. The state conformity to section 163j is denoted as follows:
30% means the state conforms to the 30% of ATI limitation under the TCJA of 2017;
50% means the state conforms to the increased federal limitation equal to 50% of ATI under the CARES Act for 2019 and 2020;
100% means the state decouples from section 163(j) and allows a full deduction of the interest expense for the current year.
For 2025 and 2026, state conformity to section 163j is based on how each state conforms to the Internal Revenue Code in general, and whether that state has previously decoupled from 163j via legislative action. It is presumed that state decoupling legislation would survive the amendments made to section 163j by the OBBB of July 4, 2025.
Included for your reference are sample federal form 8990 for 2025 and federal 163j calculation for tax years 2025 and 2026, which highlights (in red) the OBBB amendments to section 163j in effect for 2025 and 2026.
Should you have any questions or need help with the implementation of the state rules in your tax workpapers, please contact us via email at info@creditfundadvisors.com or by phone at 646-551-3050. Any feedback and suggestions on how to make this product better would be greatly appreciated!
