A section 163(j) rule the IRS dated to 2026 last December is now described as a clarification that was always the law

One word is doing most of the work here, and the word is clarified.

The IRS published Fact Sheet FS-2026-14 on 19 August. It supersedes FS-2025-09, the set of questions and answers on the limitation on the deduction for business interest expense that had stood since 23 December 2025. The new document says on its first page that it distinguishes between substantive changes in law and clarifications of existing law, and that the word change, where it appears, refers to changes in statutory language rather than to any change in how the statute operates.

That distinction lands hardest on one item. The December version said that for tax years beginning after 31 December 2025, section 163(j) is applied before any mandatory or elective interest capitalisation provisions, with sections 263(g) and 263A(f) excepted. The August version carries the same substance with the date removed, calls it a clarification, and adds a sentence saying the clarifications do not reflect a change in Treasury and IRS position.

Read together, the two documents move that rule from something that starts in 2026 to something that was always true.

What is genuinely new

Four items are now listed under the One, Big, Beautiful Bill Act, two of them described as changes and one as a clarification. The first two, both effective for tax years beginning after 31 December 2024, are the return of depreciation, amortisation and depletion to the add-back in calculating adjusted taxable income, and the widening of the floor plan financing definition of a motor vehicle to take in a trailer or camper designed to provide temporary living quarters and to be towed by or affixed to a motor vehicle.

The fourth is the one that will move numbers on a return. For tax years beginning after 31 December 2025, a United States shareholder's income inclusions from a controlled foreign corporation under sections 951(a), 951A(a) and 78, together with the associated portions of deductions, come out of the computation of adjusted taxable income altogether. Smaller adjusted taxable income means a smaller 30 percent allowance and, for a company carrying real debt, less deductible interest.

The IRS goes one step further on that point. It states that the proposed regulations under Treas. Reg. section 1.163(j)-7(j), issued in September 2020, are no longer consistent with current law, and that taxpayers can no longer rely on them for tax years beginning after 31 December 2025. Treasury and the IRS say they plan to issue guidance addressing all of this. No date is given.

The smaller items

The gross receipts figure that decides who escapes the limitation entirely is now $32 million for 2026, against $31 million for 2025 and $30 million for 2024. The CARES Act topic, which had carried the 50 percent adjusted taxable income allowance for 2019 and 2020, has been deleted as no longer applicable.

One line points somewhere the fact sheet does not go. It says Revenue Procedure 2026-17 provides transition guidance for taxpayers who previously elected to be an excepted trade or business and now want to withdraw that election, in light of the changes to sections 163(j)(8) and 168(k). An election of that kind has been irrevocable for years, and it carries a price: an electing real property trade or business must depreciate its buildings and its qualified improvement property under the alternative depreciation system, with no bonus depreciation. That revenue procedure was not read for this item and is not described here beyond the citation the fact sheet gives it.

The reliance terms are the usual ones and they matter. These answers have not been published in the Internal Revenue Bulletin, so the IRS will not use them to resolve a case, and if one turns out to state the law incorrectly the law controls. A taxpayer who relies on them reasonably and in good faith is protected from a penalty carrying a reasonable cause standard, to the extent that reliance produces an underpayment.