In 2017, P.L. 115-97 was enacted, commonly known as the Tax Cuts and Jobs Act. Among other things, the Act amended Section 163(j) of the Internal Revenue Code to place a limit on deductions for business interest. As amended, Section 163(j) generally limits a taxpayer's deductions for business interest to the sum of (1) the taxpayer's business interest income and (2) 30% of the taxpayer's taxable income (with certain adjustments). Any interest deductions disallowed under Section 163(j) may be carried forward to future years. Section 163(j) applies to all types of taxpayers, including both corporations and partnerships. In the case of a partnership, the rules generally apply at the partnership level.

The statute contains two important exceptions to the application of Section 163(j). First, the interest limitation generally does not apply to "small businesses," which are defined as taxpayers whose average annual gross receipts over the previous three years are less than a specified threshold, which is currently $26 million. While this may seem like a large number, there are very broad aggregation rules which may require gross receipts of related entities to be taken into account in determining whether a taxpayer is below this threshold.