Form 8990: Who Must File the Business Interest Limit Form
Published November 5, 2026
Form 8990 is titled Limitation on Business Interest Expense Under Section 163(j). The form figures how much business interest expense you can deduct for the year, and how much you carry forward to the next year. The current revision is dated December 2025. IRS: Form 8990 (Rev. December 2025)
The limit in plain terms
Your deduction for business interest is limited to the sum of three amounts. They are business interest income, an applicable percentage of your adjusted taxable income (ATI), and floor plan financing interest expense. Interest above that limit is not deducted in the year. It carries forward to the next year. IRS: Instructions for Form 8990 (Rev. December 2025)
Who must file
A taxpayer with business interest expense, a disallowed business interest carryforward, or current or prior year excess business interest expense generally must file. The taxpayer may be an individual, a corporation, a partnership, or an S corporation. A pass-through entity that allocates excess taxable income or excess business interest income to its owners must file, even if it has no interest expense. IRS: Instructions for Form 8990 (Rev. December 2025)
When you may not need to file
You do not have to file if you are a small business taxpayer and you have no excess business interest expense from a partnership. You also do not have to file if your only interest expense comes from one or more excepted trades or businesses. The instructions list four: providing services as an employee, an electing real property trade or business, an electing farming business, and certain regulated utility businesses. IRS: Instructions for Form 8990 (Rev. December 2025)
The gross receipts test
For tax years beginning in 2025, a taxpayer meets the gross receipts test if its average annual gross receipts for the three prior tax years are $31 million or less. You add the gross receipts for the three years and divide by three. The instructions warn that this threshold may be adjusted for inflation. For later years, check the instructions for your return. IRS: Instructions for Form 8990 (Rev. December 2025)
What changed for 2025
The instructions say a 2025 law, P.L. 119-21, changed the section 163(j) rules. For tax years beginning after 2024, the law allows an add-back to taxable income for depreciation, amortization, or depletion when figuring ATI. Line 11 of the form was revised to reflect this. IRS: Instructions for Form 8990 (Rev. December 2025)
Owners of a pass-through entity
A pass-through entity that is a small business taxpayer does not allocate excess business interest to its owners. If it is not required to file Form 8990 but an owner is, the entity must provide certain information when the owner asks for it. IRS: Instructions for Form 8990 (Rev. December 2025)
What the form asks first
Part I computes the allowable business interest expense. All taxpayers subject to section 163(j) complete it. Line 1 is the current year business interest expense. Line 2 is the disallowed carryforward from prior years. The instructions say to categorize interest first, because only business interest is subject to this limit. IRS: Form 8990 (Rev. December 2025)
Steps to follow
- Check whether you had business interest expense or a carryforward from earlier years.
- Check the exclusions from filing.
- If you are a small business taxpayer, check the gross receipts test.
- If you must file, complete Part I and the other parts that apply, and attach the form to your return.
Related reading
Read Form 3800 general business credit basics for another business form. Read single-member LLC on your personal return if your business is a single-owner LLC.
General information, not advice for your situation.
Sources: Sources: IRS, Form 8990 (Rev. December 2025), Limitation on Business Interest Expense Under Section 163(j) (https://www.irs.gov/pub/irs-pdf/f8990.pdf); IRS, Instructions for Form 8990 (Rev. December 2025) (https://www.irs.gov/pub/irs-pdf/i8990.pdf) This is general information, not advice about your specific return.
