KPMG report: Relief for prior interest limitation and depreciation elections
Important relief offers a limited window to unwind prior irrevocable elections and reassess tax strategies.
The IRS on March 18, 2026, issued Rev. Proc. 2026-17, responding to significant statutory changes enacted under the One, Big, Beautiful Bill Act (OBBBA). Those changes include the restoration of the earnings before interest, taxes, depreciation, and amortization approach to computing adjusted taxable income.
This means that, beginning in 2025, taxpayers can add back depreciation, amortization, and depletion when computing their ATI for purposes of the section 163(j) business interest expense limitation. Additionally, the OBBBA reinstated and made permanent the 100% bonus depreciation.
The new guidance offers taxpayers a chance to use the benefit of hindsight to calculate the tax benefits of the law change. This relief is important for many taxpayers, as it offers a limited window to unwind prior irrevocable elections and reassess tax strategies that were made before the law fundamentally changed.
Read a March 2026 report prepared by KPMG LLP What’s News in Tax: Revenue Procedure 2026-17: IRS Offers Key Relief for Prior Interest Limitation and Depreciation Elections