What’s Going On

The challenge: Many manufacturers borrow funds to finance long-term investments in equipment and facilities, which in turn help create jobs and enable manufacturers to compete effectively in today’s global economy.

At the beginning of 2022, a stricter limitation on the deductibility of the interest payments on business loans went into effect, increasing the cost of financing critical investments in machinery and equipment. This stricter limitation effectively acts as a tax on investment by making it more expensive for capital-intensive companies to finance critical purchases, grow their businesses and hire new workers.

What we’re doing about it: With nearly half a million American jobs at stake, the NAM is rallying manufacturers to urge Congress to support key legislation that has been newly introduced in the House and Senate: the American Investment in Manufacturing (AIM) Act (H.R. 2788/S. 1232), which would reverse the stricter limitation and allow manufacturers to continue to invest for growth.

Quick Facts

• Prior to 2022, companies could deduct interest on business loans up to 30% of their earnings before interest, tax, depreciation and amortization (EBITDA). However, since 2022, the deduction has been limited to 30% of earnings before interest and tax (EBIT)—a significant change that disproportionately impacts manufacturers given the industry’s capital-intensive investments.
• Of the more than 30 OECD countries with an earnings-based interest limitation, the U.S. is the only one that employs an EBIT standard.
• According to a recent study, failing to reverse this harmful change could cost the U.S. economy 467,000 jobs and reduce U.S. GDP by $43.8 billion.

In Washington: The NAM is rallying America’s business community through our direct engagement with congressional leadership and key tax writers on the need to permanently reverse the harmful EBIT-based limitation and allow manufacturers to continue to invest for growth.

In December, the NAM led a letter with over 230 companies and business groups to congressional leadership urging Congress to permanently repeal the stricter interest limitation in order to support businesses’ ability to grow and create jobs here in the United States.

In early 2023, the NAM wrote to Congress and the Biden Administration about the importance of reversing the shift from EBITDA to EBIT.

Our Message

Don’t miss the latest news and insights from the NAM newsroom and the media on manufacturers’ work to urge Congress to reverse the stricter limitation and allow manufacturers to continue to invest for growth.

• The Hill: How Congress can reverse three limits on manufacturing’s growth
• Press Release: NAM Applauds Congressional Focus on Key Manufacturing Tax Provisions
• NAM News Room: NAM to Congress: Reverse Course on Harmful Tax Changes
• Press Release: Action Needed on Interest Deductibility, NAM Study Shows
• Press Release: NAM Competes to Win on Taxes