The 2017 tax act (Pub. L. No. 115-97) significantly changed the deductibility of business interest expense for tax years beginning after December 31, 2017. Under prior law, business interest expense was generally deductible in the year the interest was paid or accrued, except that a corporation’s deduction was limited by the earnings stripping rules of former §163(j).
The 2017 tax act replaced the earnings stripping rules with a new limitation (in current §163(j)) that applies to the business interest of all taxpayers, with the exception of small businesses (other than tax shelters prohibited from using the cash method under §448(a)(3)) that meet the gross receipts test in §448(c).