Section IV—163(j) Limitation Calculations (Lines 26 Through 31)

Limitation on Business Interest Expense

Line 26. Applicable percentage of ATI limitation. Multiply the ATI from line 22 by the applicable percentage. The applicable percentage is 30% (30% ATI limitation).

For a partnership or S corporation, if line 26 is zero, enter -0- on lines 35 and 40.

Allowable Interest Expense

Line 30. Total current year business interest expense deduction. A taxpayer subject to the section 163(j) limitation will enter on line 30 the smaller of line 29 or line 5. Line 30 is the amount of current year business interest expense deduction allowed after considering the section 163(j) limitation.

If a partner is not subject to the section 163(j) limitation and has partnership excess business interest expense

Instructions for Form 8990 (Rev. 12-2025) 11

treated as paid or accrued in the current year, enter the amount from Schedule A, line 44, column (h). The amount will not be subject to further limitation under section 163(j).

If the amount on line 29 is less than the amount on line 5 and business interest expense is reported on more than one location on the return (such as ordinary business interest expense and farming interest expense), then the disallowed business interest expense must be allocated to each source in proportion to the total amount of business interest expense from each source. Attach a schedule to Form 8990 that indicates the amount and line item on the tax return where the business interest expense is being deducted.

Carryforward

Line 31. Disallowed business interest expense. Subtract line 29 from line 5. If zero or less, enter -0-.

Note: The amount on line 31 is used on the taxpayer’s next year’s Form 8990, line 2 (except for partnerships). If the taxpayer completing this form is a partnership, carry the amount on line 31 to Part II, line 32, of the current year Form 8990.