Internal Revenue Code · 26 U.S.C.
§ 163. Interest
Official text, no changes From the Office of the Law Revision Counsel, release point 119-121 (current through Public Law 119-121 (October 9, 2026)). Compare it with the official text at uscode.house.gov (external site).
Cite as 26 U.S.C. § 163
At a glance
Read from the text, the source credit and the official notes. Not part of the law.
- Status
- In force
- Enacted
- April 10, 1963 by Pub. L. 88–9
- Last amended
- July 4, 2025 by Pub. L. 119–21
- Amendments
- 36 dated changes in the source credit
- Length
- 14 subsections · 9,022 words · about 39 min to read
- Defines
- 40 terms
- Cross-references
- cites 52; cited by 31 Code sections and 107 other regulations
- Regulations
- 29 issued under this section
There shall be allowed as a deduction all interest paid or accrued within the taxable year on indebtedness.
In the case of any contract to which paragraph (1) applies, the amount treated as interest for any taxable year shall not exceed the aggregate carrying charges which are properly attributable to such taxable year.
For purposes of this subtitle, any annual or periodic rental under a redeemable ground rent (excluding amounts in redemption thereof) shall be treated as interest on an indebtedness secured by a mortgage.
In the case of a taxpayer other than a corporation, the amount allowed as a deduction under this chapter for investment interest for any taxable year shall not exceed the net investment income of the taxpayer for the taxable year.
The amount not allowed as a deduction for any taxable year by reason of paragraph (1) shall be treated as investment interest paid or accrued by the taxpayer in the succeeding taxable year.
The term “investment interest” means any interest allowable as a deduction under this chapter (determined without regard to paragraph (1)) which is paid or accrued on indebtedness properly allocable to property held for investment.
For purposes of this paragraph, the term “interest” includes any amount allowable as a deduction in connection with personal property used in a short sale.
The term “investment expenses” means the deductions allowed under this chapter (other than for interest) which are directly connected with the production of investment income.
Investment income and investment expenses shall not include any income or expenses taken into account under section 469 in computing income or loss from a passive activity.
In the case of property described in subparagraph (A)(i), expenses shall be allocated to such property in the same manner as under section 469.
For purposes of this paragraph, the terms “activity”, “passive activity”, and “materially participate” have the meanings given such terms by section 469.
The portion of the original issue discount with respect to any debt instrument which is allowable as a deduction to the issuer for any taxable year shall be equal to the aggregate daily portions of the original issue discount for days during such taxable year.
The term “debt instrument” has the meaning given such term by section 1275(a)(1).
The daily portion of the original issue discount for any day shall be determined under section 1272(a) (without regard to paragraph (7) thereof and without regard to section 1273(a)(3)).
In the case of an obligor of a short-term obligation (as defined in section 1283(a)(1)(A)) who uses the cash receipts and disbursements method of accounting, the original issue discount (and any other interest payable) on such obligation shall be deductible only when paid.
If any debt instrument having original issue discount is held by a related foreign person, any portion of such original issue discount shall not be allowable as a deduction to the issuer until paid. The preceding sentence shall not apply to the extent that the original issue discount is effectively connected with the conduct by such foreign related person of a trade or business within the United States unless such original issue discount is exempt from taxation (or is subject to a reduced rate of tax) pursuant to a treaty obligation of the United States.
In the case of any debt instrument having original issue discount which is held by a related foreign person which is a controlled foreign corporation (as defined in section 957) or a passive foreign investment company (as defined in section 1297), a deduction shall be allowable to the issuer with respect to such original issue discount for any taxable year before the taxable year in which paid only to the extent such original issue discount is includible (determined without regard to properly allocable deductions and qualified deficits under section 952(c)(1)(B)) during such prior taxable year in the gross income of a United States person who owns (within the meaning of section 958(a)) stock in such corporation.
The Secretary may by regulation exempt transactions from the application of clause (i), including any transaction which is entered into by a payor in the ordinary course of a trade or business in which the payor is predominantly engaged.
This subsection shall not apply to any debt instrument described in section 1272(a)(2)(D) (relating to loans between natural persons).
Solely for purposes of sections 243, 245, 246, and 246A, the dividend equivalent portion of any amount includible in gross income of a corporation under section 1272(a) in respect of an applicable high yield discount obligation shall be treated as a dividend received by such corporation from the corporation issuing such obligation.
For purposes of clause (i), the term “disqualified yield” means the excess of the yield to maturity on the obligation over the sum referred to in subsection (i)(1)(B) plus 1 percentage point, and the term “total return” is the amount which would have been the original issue discount on the obligation if interest described in the parenthetical in section 1273(a)(2) were included in the stated redemption price at maturity.
This paragraph shall not apply to any obligation issued by any corporation for any period for which such corporation is an S corporation.
This paragraph shall not apply for purposes of determining earnings and profits; except that, for purposes of determining the dividend equivalent portion of any amount includible in gross income under section 1272(a) in respect of an applicable high yield discount obligation, no reduction shall be made for any amount attributable to the disqualified portion of any original issue discount on such obligation.
This paragraph shall not apply to any applicable high yield discount obligation issued during the period beginning on September 1, 2008, and ending on December 31, 2009, in exchange (including an exchange resulting from a modification of the debt instrument) for an obligation which is not an applicable high yield discount obligation and the issuer (or obligor) of which is the same as the issuer (or obligor) of such applicable high yield discount obligation. The preceding sentence shall not apply to any obligation the interest on which is interest described in section 871(h)(4) (without regard to subparagraph (D) thereof) or to any obligation issued to a related person (within the meaning of section 108(e)(4)).
Any obligation to which clause (i) applies shall not be treated as an applicable high yield discount obligation for purposes of applying this subparagraph to any other obligation issued in exchange for such obligation.
The Secretary may apply this paragraph with respect to debt instruments issued in periods following the period described in clause (i) if the Secretary determines that such application is appropriate in light of distressed conditions in the debt capital markets.
For provision relating to deduction of original issue discount on tax-exempt obligation, see section 1288.
For special rules in the case of the borrower under certain loans for personal use, see section 1275(b).
For purposes of this subsection, rules similar to the rules of section 149(a)(3) shall apply, except that a dematerialized book entry system or other book entry system specified by the Secretary shall be treated as a book entry system described in such section.
The amount of the deduction under this section for interest paid or accrued during any taxable year on indebtedness with respect to which a mortgage credit certificate has been issued under section 25 shall be reduced by the amount of the credit allowable with respect to such interest under section 25 (determined without regard to section 26).
In the case of a taxpayer other than a corporation, no deduction shall be allowed under this chapter for personal interest paid or accrued during the taxable year.
The aggregate amount treated as acquisition indebtedness for any period shall not exceed $1,000,000 ($500,000 in the case of a married individual filing a separate return).
The aggregate amount treated as home equity indebtedness for any period shall not exceed $100,000 ($50,000 in the case of a separate return by a married individual).
The limitation of subparagraph (B)(ii) shall be reduced (but not below zero) by the aggregate amount of outstanding pre-October 13, 1987, indebtedness.
Premiums paid or accrued for qualified mortgage insurance by a taxpayer during the taxable year in connection with acquisition indebtedness with respect to a qualified residence of the taxpayer shall be treated for purposes of this section as interest which is qualified residence interest.
The amount otherwise treated as interest under clause (i) shall be reduced (but not below zero) by 10 percent of such amount for each $1,000 ($500 in the case of a married individual filing a separate return) (or fraction thereof) that the taxpayer’s adjusted gross income for the taxable year exceeds $100,000 ($50,000 in the case of a married individual filing a separate return).
Clause (i) shall not apply with respect to any mortgage insurance contracts issued before January 1, 2007.
Subparagraph (B)(ii) shall be applied by substituting “$750,000 ($375,000” for “$1,000,000 ($500,000”.
Clause (iv) of subparagraph (E) shall not apply.
Subclause (II) shall not apply to any indebtedness incurred on or before December 15, 2017, and, in applying such subclause to any indebtedness incurred after such date, the limitation under such subclause shall be reduced (but not below zero) by the amount of any indebtedness incurred on or before December 15, 2017, which is treated as acquisition indebtedness for purposes of this subsection for the taxable year.
In the case of a taxpayer who enters into a written binding contract before December 15, 2017, to close on the purchase of a principal residence before January 1, 2018, and who purchases such residence before April 1, 2018, subclause (IV) shall be applied by substituting “April 1, 2018” for “December 15, 2017”.
In the case of any indebtedness which is incurred to refinance indebtedness, such refinanced indebtedness shall be treated for purposes of clause (i)(III) as incurred on the date that the original indebtedness was incurred to the extent the amount of the indebtedness resulting from such refinancing does not exceed the amount of the refinanced indebtedness.
Subclause (I) shall not apply to any indebtedness after the expiration of the term of the original indebtedness or, if the principal of such original indebtedness is not amortized over its term, the expiration of the term of the 1st refinancing of such indebtedness (or if earlier, the date which is 30 years after the date of such 1st refinancing).
Section 108(h)(2) shall be applied without regard to this subparagraph.
In the case of taxable years beginning after December 31, 2024, and before January 1, 2029, for purposes of this subsection the term “personal interest” shall not include qualified passenger vehicle loan interest.
For purposes of this paragraph, the term “qualified passenger vehicle loan interest” means any interest which is paid or accrued during the taxable year on indebtedness incurred by the taxpayer after December 31, 2024, for the purchase of, and that is secured by a first lien on, an applicable passenger vehicle for personal use.
Interest shall not be treated as qualified passenger vehicle loan interest under this paragraph unless the taxpayer includes the vehicle identification number of the applicable passenger vehicle described in clause (i) on the return of tax for the taxable year.
The amount of interest taken into account by a taxpayer under subparagraph (B) for any taxable year shall not exceed $10,000.
The amount which is otherwise allowable as a deduction under subsection (a) as qualified passenger vehicle loan interest (determined without regard to this clause and after the application of clause (i)) shall be reduced (but not below zero) by $200 for each $1,000 (or portion thereof) by which the modified adjusted gross income of the taxpayer for the taxable year exceeds $100,000 ($200,000 in the case of a joint return).
For purposes of this clause, the term “modified adjusted gross income” means the adjusted gross income of the taxpayer for the taxable year increased by any amount excluded from gross income under section 911, 931, or 933.
For purposes of subparagraph (D), the term “final assembly” means the process by which a manufacturer produces a vehicle at, or through the use of, a plant, factory, or other place from which the vehicle is delivered to a dealer with all component parts necessary for the mechanical operation of the vehicle included with the vehicle, whether or not the component parts are permanently installed in or on the vehicle.
Indebtedness described in subparagraph (B) shall include indebtedness that results from refinancing any indebtedness described in such subparagraph, and that is secured by a first lien on the applicable passenger vehicle with respect to which the refinanced indebtedness was incurred, but only to the extent the amount of such resulting indebtedness does not exceed the amount of such refinanced indebtedness.
Indebtedness described in subparagraph (B) shall not include any indebtedness owed to a person who is related (within the meaning of section 267(b) or 707(b)(1)) to the taxpayer.
For purposes of clause (i)(II), notwithstanding section 280A(d)(1), if the taxpayer does not rent a dwelling unit at any time during a taxable year, such unit may be treated as a residence for such taxable year.
Any indebtedness secured by stock held by the taxpayer as a tenant-stockholder (as defined in section 216) in a cooperative housing corporation (as so defined) shall be treated as secured by the house or apartment which the taxpayer is entitled to occupy as such a tenant-stockholder. If stock described in the preceding sentence may not be used to secure indebtedness, indebtedness shall be treated as so secured if the taxpayer establishes to the satisfaction of the Secretary that such indebtedness was incurred to acquire such stock.
Indebtedness shall not fail to be treated as secured by any property solely because, under any applicable State or local homestead or other debtor protection law in effect on August 16, 1986, the security interest is ineffective or the enforceability of the security interest is restricted.
For purposes of determining whether any interest paid or accrued by an estate or trust is qualified residence interest, any residence held by such estate or trust shall be treated as a qualified residence of such estate or trust if such estate or trust establishes that such residence is a qualified residence of a beneficiary who has a present interest in such estate or trust or an interest in the residuary of such estate or trust.
Any amount paid by the taxpayer for qualified mortgage insurance that is properly allocable to any mortgage the payment of which extends to periods that are after the close of the taxable year in which such amount is paid shall be chargeable to capital account and shall be treated as paid in such periods to which so allocated. No deduction shall be allowed for the unamortized balance of such account if such mortgage is satisfied before the end of its term. The preceding sentences shall not apply to amounts paid for qualified mortgage insurance provided by the Department of Veterans Affairs or the Rural Housing Service.
For purposes of this subsection, the term “debt instrument” means any instrument which is a debt instrument as defined in section 1275(a).
The amount of any business interest not allowed as a deduction for any taxable year by reason of paragraph (1) shall be treated as business interest paid or accrued in the succeeding taxable year.
In the case of any taxpayer (other than a tax shelter prohibited from using the cash receipts and disbursements method of accounting under section 448(a)(3)) which meets the gross receipts test of section 448(c) for any taxable year, paragraph (1) shall not apply to such taxpayer for such taxable year. In the case of any taxpayer which is not a corporation or a partnership, the gross receipts test of section 448(c) shall be applied in the same manner as if such taxpayer were a corporation or partnership.
The adjusted basis of a partner in a partnership interest shall be reduced (but not below zero) by the amount of excess business interest allocated to the partner under clause (i)(II).
If a partner disposes of a partnership interest, the adjusted basis of the partner in the partnership interest shall be increased immediately before the disposition by the amount of the excess (if any) of the amount of the basis reduction under subclause (I) over the portion of any excess business interest allocated to the partner under clause (i)(II) which has previously been treated under clause (ii) as business interest paid or accrued by the partner. The preceding sentence shall also apply to transfers of the partnership interest (including by reason of death) in a transaction in which gain is not recognized in whole or in part. No deduction shall be allowed to the transferor or transferee under this chapter for any excess business interest resulting in a basis increase under this subclause.
Rules similar to the rules of subparagraphs (A) and (C) shall apply with respect to any S corporation and its shareholders.
For purposes of this subsection, the term “business interest” means any interest paid or accrued on indebtedness properly allocable to a trade or business. Such term shall not include investment interest (within the meaning of subsection (d)). Such term shall not include any interest which is capitalized under section 263(g) or 263A(f).
For purposes of this subsection, the term “business interest income” means the amount of interest includible in the gross income of the taxpayer for the taxable year which is properly allocable to a trade or business. Such term shall not include investment income (within the meaning of subsection (d)).
For purposes of this paragraph, the term “electing real property trade or business” means any trade or business which is described in section 469(c)(7)(C) and which makes an election under this subparagraph. Any such election shall be made at such time and in such manner as the Secretary shall prescribe, and, once made, shall be irrevocable.
The term “floor plan financing interest” means interest paid or accrued on floor plan financing indebtedness.
No portion of any business interest carried forward under paragraph (2) from any taxable year to any succeeding taxable year shall, for purposes of this title (including any interest capitalization provision which previously applied to such portion) be treated as interest to which an interest capitalization provision applies.
The Secretary shall issue such regulations or guidance as may be necessary or appropriate to carry out the purposes of this subsection, including regulations or guidance to determine which business interest is taken into account under this subsection and section 59A(c)(3).
Except as provided in clause (ii) or (iii), in the case of any taxable year beginning in 2019 or 2020, paragraph (1)(B) shall be applied by substituting “50 percent” for “30 percent”.
A taxpayer may elect, at such time and in such manner as the Secretary may prescribe, not to have clause (i) apply to any taxable year. Such an election, once made, may be revoked only with the consent of the Secretary. In the case of a partnership, any such election shall be made by the partnership and may be made only for taxable years beginning in 2020.
Subject to clause (ii), in the case of any taxable year beginning in 2020, the taxpayer may elect to apply this subsection by substituting the adjusted taxable income of the taxpayer for the last taxable year beginning in 2019 for the adjusted taxable income for such taxable year. In the case of a partnership, any such election shall be made by the partnership.
If an election is made under clause (i) for a taxable year which is a short taxable year, the adjusted taxable income for the taxpayer’s last taxable year beginning in 2019 which is substituted under clause (i) shall be equal to the amount which bears the same ratio to such adjusted taxable income determined without regard to this clause as the number of months in the short taxable year bears to 12 22 So in original. Probably should be followed by a period.
No deduction shall be allowed under this section for any interest payable under section 6601 on any unpaid portion of the tax imposed by section 2001 for the period during which an extension of time for payment of such tax is in effect under section 6166.
No deduction shall be allowed under this chapter for any interest paid or accrued on a disqualified debt instrument.
For purposes of this subsection, the term “disqualified debt instrument” means any indebtedness of a corporation which is payable in equity of the issuer or a related party or equity held by the issuer (or any related party) in any other person.
If the disqualified debt instrument of a corporation is payable in equity held by the issuer (or any related party) in any other person (other than a related party), the basis of such equity shall be increased by the amount not allowed as a deduction by reason of paragraph (1) with respect to the instrument.
For purposes of this subsection, the term “disqualified debt instrument” does not include indebtedness issued by a dealer in securities (or a related party) which is payable in, or by reference to, equity (other than equity of the issuer or a related party) held by such dealer in its capacity as a dealer in securities. For purposes of this paragraph, the term “dealer in securities” has the meaning given such term by section 475.
For purposes of this subsection, a person is a related party with respect to another person if such person bears a relationship to such other person described in section 267(b) or 707(b).
The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this subsection, including regulations preventing avoidance of this subsection through the use of an issuer other than a corporation.
No deduction shall be allowed under this chapter for any interest paid or accrued under section 6601 on any underpayment of tax which is attributable to the portion of any reportable transaction understatement (as defined in section 6662A(b)) with respect to which the requirement of section 6664(d)(2)(A) 1 is not met.
(Aug. 16, 1954, ch. 736, 68A Stat. 46; Pub. L. 88–9, § 1(a), (c), Apr. 10, 1963, 77 Stat. 6, 7; Pub. L. 88–272, title II, § 224(c), Feb. 26, 1964, 78 Stat. 79; Pub. L. 91–172, title II, § 221(a), Dec. 30, 1969, 83 Stat. 574; Pub. L. 92–178, title III, § 304(a)(2), (b)(2), (d), Dec. 10, 1971, 85 Stat. 523, 524; Pub. L. 94–455, title II, §§ 205(c)(3), 209(a), title XIX, §§ 1901(b)(3)(K), (8)(C), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1535, 1542, 1793, 1794, 1834; Pub. L. 97–248, title II, § 231(b), title III, § 310(b)(2), Sept. 3, 1982, 96 Stat. 498, 596; Pub. L. 97–354, § 5(a)(18), Oct. 19, 1982, 96 Stat. 1693; Pub. L. 98–369, div. A, title I, §§ 42(a)(3), 56(b), 127(f), 128(c), title VI, § 612(c), July 18, 1984, 98 Stat. 556, 574, 652, 654, 911; Pub. L. 99–514, title V, § 511(a), (b), title IX, § 902(e)(1), title XIII, § 1301(j)(3), title XVIII, §§ 1803(a)(4), 1810(e)(1), Oct. 22, 1986, 100 Stat. 2244, 2246, 2382, 2657, 2793, 2825; Pub. L. 100–203, title X, §§ 10102(a), (b), 10212(b), Dec. 22, 1987, 101 Stat. 1330–384, 1330–386, 1330–406; Pub. L. 100–647, title I, §§ 1005(c)(1)–(9), (12), 1006(u)(1), 1009(b)(6), title II, § 2004(b)(1), Nov. 10, 1988, 102 Stat. 3390–3392, 3427, 3449, 3598; Pub. L. 101–239, title VII, §§ 7202(a), (b), 7210(a), Dec. 19, 1989, 103 Stat. 2330, 2331, 2339; Pub. L. 101–508, title XI, § 11701(b), (c), Nov. 5, 1990, 104 Stat. 1388–507; Pub. L. 103–66, title XIII, §§ 13206(d)(1), 13228(a)–(c), Aug. 10, 1993, 107 Stat. 467, 494, 495; Pub. L. 104–188, title I, §§ 1703(n)(4), 1704(f)(2)(A), (B), Aug. 20, 1996, 110 Stat. 1877, 1879; Pub. L. 105–34, title III, § 312(d)(1), title V, § 503(b)(2), title X, § 1005(a), title XVI, § 1604(g)(1), Aug. 5, 1997, 111 Stat. 839, 853, 911, 1099; Pub. L. 105–277, div. J, title IV, § 4003(a)(1), Oct. 21, 1998, 112 Stat. 2681–908; Pub. L. 106–170, title V, § 544, Dec. 17, 1999, 113 Stat. 1944; Pub. L. 108–27, title III, § 302(b), May 28, 2003, 117 Stat. 762; Pub. L. 108–357, title VIII, §§ 838(a), 841(a), 845(a)–(d), Oct. 22, 2004, 118 Stat. 1596, 1597, 1600, 1601; Pub. L. 109–135, title IV, § 403(a)(15), Dec. 21, 2005, 119 Stat. 2619; Pub. L. 109–222, title V, § 501(a), (b), May 17, 2006, 120 Stat. 354; Pub. L. 109–432, div. A, title IV, § 419(a), (b), Dec. 20, 2006, 120 Stat. 2967; Pub. L. 110–142, § 3(a), Dec. 20, 2007, 121 Stat. 1804; Pub. L. 111–5, div. B, title I, § 1232(a), (b), Feb. 17, 2009, 123 Stat. 341; Pub. L. 111–147, title V, § 502(a)(1), (2)(B), (C), (c), Mar. 18, 2010, 124 Stat. 107, 108; Pub. L. 111–312, title VII, § 759(a), Dec. 17, 2010, 124 Stat. 3323; Pub. L. 112–240, title II, § 204(a), (b), Jan. 2, 2013, 126 Stat. 2323; Pub. L. 113–295, div. A, title I, § 104(a), title II, §§ 220(h), 221(a)(25)(A), Dec. 19, 2014, 128 Stat. 4013, 4036, 4040; Pub. L. 114–113, div. Q, title I, § 152(a), Dec. 18, 2015, 129 Stat. 3066; Pub. L. 115–97, title I, §§ 11043(a), 13301(a), Dec. 22, 2017, 131 Stat. 2086, 2117; Pub. L. 115–123, div. D, title I, § 40202(a), Feb. 9, 2018, 132 Stat. 145; Pub. L. 115–141, div. U, title IV, § 401(a)(48), (b)(12), (c)(1)(C), (3)(B), Mar. 23, 2018, 132 Stat. 1186, 1202, 1205, 1206; Pub. L. 116–94, div. Q, title I, § 102(a), Dec. 20, 2019, 133 Stat. 3228; Pub. L. 116–136, div. A, title II, § 2306(a), Mar. 27, 2020, 134 Stat. 358; Pub. L. 116–260, div. EE, title I, § 133(a), Dec. 27, 2020, 134 Stat. 3053; Pub. L. 119–21, title VII, §§ 70108(a), 70203(a), 70303(a), (b), 70341(a)–(c), 70342(a), July 4, 2025, 139 Stat. 163, 176, 195, 207, 208.)
Terms defined here
Where the text says “the term … means”. Select a term to jump to its definition.
- acquisition indebtedness § 163(h)(3)(B)(i)
- adjusted taxable income § 163(j)(8)
- applicable high yield discount obligation § 163(i)(1)
- applicable passenger vehicle § 163(h)(4)(D)
- business interest § 163(j)(5)
- business interest income § 163(j)(6)
- dealer in securities § 163(l)(5)
- debt instrument § 163(e)(2)(A)
- debt instrument § 163(i)(4)
- disqualified debt instrument § 163(l)(2)
- disqualified debt instrument § 163(l)(5)
- disqualified yield § 163(e)(5)(C)(ii)
- educational services § 163(b)(1)(B)
- electing farming business § 163(j)(7)(C)
- electing real property trade or business § 163(j)(7)(B)
- excess taxable income § 163(j)(4)(C)
- final assembly § 163(h)(4)(E)(i)
- floor plan financing indebtedness § 163(j)(9)(B)
- floor plan financing interest § 163(j)(9)(A)
- home equity indebtedness § 163(h)(3)(C)(i)
- interest § 163(d)(3)(C)
- interest capitalization provision § 163(j)(10)(D)
- investment expenses § 163(d)(4)(C)
- investment income § 163(d)(4)(B)
- investment interest § 163(d)(3)(A)
- investment interest § 163(d)(3)(B)
- modified adjusted gross income § 163(h)(4)(C)(ii)(II)
- motor vehicle § 163(j)(9)(C)
- net investment income § 163(d)(4)(A)
- personal interest § 163(h)(2)
- personal interest § 163(h)(4)(A)
- pre-October 13, 1987, indebtedness § 163(h)(3)(D)(iii)
- property held for investment § 163(d)(5)(A)
- qualified mortgage insurance § 163(h)(5)(E)
- qualified passenger vehicle loan interest § 163(h)(4)(B)(i)
- qualified residence § 163(h)(5)(A)(i)
- qualified residence interest § 163(h)(3)(A)
- registration-required obligation § 163(f)(2)(A)
- related foreign person § 163(e)(3)(C)
- trade or business § 163(j)(7)(A)
Regulations under this section
Treasury regulations (26 CFR) issued under § 163
- § 1.163-1 Interest deduction in general.
- § 1.163-2 Installment purchases where interest charge is not separately stated.
- § 1.163-3 Deduction for discount on bond issued on or before May 27, 1969.
- § 1.163-4 Deduction for original issue discount on certain obligations issued after May 27, 1969.
- § 1.163-5 Denial of interest deduction on certain obligations issued after December 31, 1982, unless issued in registered form.
- § 1.163-5T Denial of interest deduction on certain obligations issued after December 31, 1982, unless issued in registered form (temporary).
- § 1.163-6T Reduction of deduction where section 25 credit taken (temporary).
- § 1.163-7 Deduction for OID on certain debt instruments.
- § 1.163-8T Allocation of interest expense among expenditures (temporary).
- § 1.163-9T Personal interest (temporary).
- § 1.163-10T Qualified residence interest (temporary).
- § 1.163-11 Allocation of certain prepaid qualified mortgage insurance premiums.
- § 1.163-12 Deduction of original issue discount on instrument held by related foreign person.
- § 1.163-13 Treatment of bond issuance premium.
- § 1.163-15 Debt proceeds distributed from any taxpayer account or from cash.
- § 1.163-16 xxx
- § 1.163(d)-1 Time and manner for making elections under the Omnibus Budget Reconciliation Act of 1993 and the Jobs and Growth Tax Relief Reconciliation Act of 2003.
- § 1.163(j)-0 Table of contents.
- § 1.163(j)-1 Definitions.
- § 1.163(j)-2 Deduction for business interest expense limited.
- § 1.163(j)-3 Relationship of the section 163(j) limitation to other provisions affecting interest.
- § 1.163(j)-4 General rules applicable to C corporations (including REITs, RICs, and members of consolidated groups) and tax-exempt corporations.
- § 1.163(j)-5 General rules governing disallowed business interest expense carryforwards for C corporations.
- § 1.163(j)-6 Application of the section 163(j) limitation to partnerships and subchapter S corporations.
- § 1.163(j)-7 Application of the section 163(j) limitation to foreign corporations and United States shareholders.
- § 1.163(j)-9 Elections for excepted trades or businesses; safe harbor for certain REITs.
- § 1.163(j)-10 Allocation of interest expense, interest income, and other items of expense and gross income to an excepted trade or business.
- § 1.163(j)-11 Transition rules.
- § 5f.163-1 Denial of interest deduction on certain obligations issued after December 31, 1982, unless issued in registered form.
Cross-references
Computed from the citations in the text of Title 26 and 26 CFR.
This section cites 52 other sections
- § 170(b)(1)(A)(ii) Charitable, etc., contributions and gifts
- § 469 Passive activity losses and credits limited
- § 1(h)(11)(B) Tax imposed
- § 1275(a)(1) Other definitions and special rules
- § 1272(a) Current inclusion in income of original issue discount
- § 1273(a)(3) Determination of amount of original issue discount
- § 1283(a)(1)(A) Definitions and special rules
- § 957 Controlled foreign corporations; United States persons
- § 1297 Passive foreign investment company
- § 952(c)(1)(B) Subpart F income defined
- § 958(a) Rules for determining stock ownership
- § 267(b) Losses, expenses, and interest with respect to transactions between related taxpayers
- § 243 Dividends received by corporations
- § 245 Dividends received from certain foreign corporations
- § 246 Rules applying to deductions for dividends received
- § 246A Dividends received deduction reduced where portfolio stock is debt financed
- § 871(h)(4) Tax on nonresident alien individuals
- § 108(e)(4) Income from discharge of indebtedness
- § 1288 Treatment of original issue discount on tax-exempt obligations
- § 149(a)(3) Bonds must be registered to be tax exempt; other requirements
- § 25 Interest on certain home mortgages
- § 26 Limitation based on tax liability; definition of tax liability
- § 6601 Interest on underpayment, nonpayment, or extensions of time for payment, of tax
- § 2001 Imposition and rate of tax
Show 28 more
- § 6163 Extension of time for payment of estate tax on value of reversionary or remainder interest in property
- § 221 Interest on education loans
- § 911 Citizens or residents of the United States living abroad
- § 121 Exclusion of gain from sale of principal residence
- § 280A(d)(1) Disallowance of certain expenses in connection with business use of home, rental of vacation homes, etc.
- § 216 Deduction of taxes, interest, and business depreciation by cooperative housing corporation tenant-stockholder
- § 1274(d) Determination of issue price in the case of certain debt instruments issued for property
- § 453(f)(1) Installment method
- § 448(a)(3) Limitation on use of cash method of accounting
- § 263(g) Capital expenditures
- § 263A(e)(4) Capitalization and inclusion in inventory costs of certain expenses
- § 199A(g)(2) Qualified business income
- § 172 Net operating loss deduction
- § 951(a) Amounts included in gross income of United States shareholders
- § 951A(a) Net CFC tested income included in gross income of United States shareholders
- § 78 Gross up for deemed paid foreign tax credit
- § 245A(a) Deduction for foreign source-portion of dividends received by domestic corporations from specified 10-percent owned foreign corporations
- § 964(e)(4) Miscellaneous provisions
- § 59A(c)(3) Tax on base erosion payments of taxpayers with substantial gross receipts
- § 168(g)(1)(F) Accelerated cost recovery system
- § 6166 Extension of time for payment of estate tax where estate consists largely of interest in closely held business
- § 475 Mark to market accounting method for dealers in securities
- § 6662A(b) Imposition of accuracy-related penalty on understatements with respect to reportable transactions
- § 6664(d)(2) Definitions and special rules
- § 264 Certain amounts paid in connection with insurance contracts
- § 265(a)(2) Expenses and interest relating to tax-exempt income
- § 266 Carrying charges
- § 1055 Redeemable ground rents
Cited by 31 Code sections
- § 1(h)(2) Tax imposed
- § 56(b)(1)(B) Adjustments in computing alternative minimum taxable income
- § 59A(c)(2)(B)(ii) Tax on base erosion payments of taxpayers with substantial gross receipts
- § 63(b)(7) Taxable income defined
- § 67(b)(1) 2-percent floor on miscellaneous itemized deductions
- § 108(h)(2) Income from discharge of indebtedness
- § 162(k)(2)(A)(i) Trade or business expenses
- § 165(j)(2)(A) Losses
- § 168(g)(1)(G) Accelerated cost recovery system
- § 195(c)(1)(B) Start-up expenditures
- § 216(a)(2) Deduction of taxes, interest, and business depreciation by cooperative housing corporation tenant-stockholder
- § 263A(f)(2)(B) Capitalization and inclusion in inventory costs of certain expenses
- § 312(m) Effect on earnings and profits
- § 381(c)(20) Carryovers in certain corporate acquisitions
- § 382(d)(3) Limitation on net operating loss carryforwards and certain built-in losses following ownership change
- § 465(c)(7)(D)(iv)(II) Deductions limited to amount at risk
- § 469(j)(7) Passive activity losses and credits limited
- § 483(d)(3) Interest on certain deferred payments
- § 805(b)(1) General deductions
- § 832(c)(2) Insurance company taxable income
- § 871(h)(7) Tax on nonresident alien individuals
- § 881(c)(7) Tax on income of foreign corporations not connected with United States business
- § 911(c)(3)(A)(ii) Citizens or residents of the United States living abroad
- § 1055(d) Redeemable ground rents
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- § 1275(b)(2)(B) Other definitions and special rules
- § 1287(b)(1) Denial of capital gain treatment for gains on certain obligations not in registered form
- § 1288(a)(1) Treatment of original issue discount on tax-exempt obligations
- § 4701(b)(1)(A) Tax on issuer of registration-required obligation not in registered form
- § 6050AA(d)(1) Returns relating to applicable passenger vehicle loan interest received in trade or business from individuals
- § 6109(h)(1) Identifying numbers
- § 7872(d)(1)(E)(i) Treatment of loans with below-market interest rates
Cited in 107 regulations not issued under it
- § 1.25-1T Credit for interest paid on certain home mortgages (Temporary).
- § 1.25-3T Qualified mortgage credit certificate (Temporary).
- § 1.46-4 Limitations with respect to certain persons.
- § 1.57-1 Items of tax preference defined.
- § 1.59A-0 Table of contents.
- § 1.59A-3 Base erosion payments and base erosion tax benefits.
- § 1.59A-7 Application of base erosion and anti-abuse tax to partnerships.
- § 1.67-1T 2-percent floor on miscellaneous itemized deductions (temporary).
- § 1.72(p)-1 Loans treated as distributions.
- § 1.108-2 Acquisition of indebtedness by a person related to the debtor.
- § 1.162(k)-1 Disallowance of deduction for reacquisition payments.
- § 1.165-12 Denial of deduction for losses on registration-required obligations not in registered form.
- § 1.166-9 Losses of guarantors, endorsers, and indemnitors incurred, on agreements made after December 31, 1975, in taxable years beginning after such date.
- § 1.168(k)-2 Additional first year depreciation deduction for property acquired and placed in service after September 27, 2017.
- § 1.170A-3 Reduction of charitable contribution for interest on certain indebtedness.
- § 1.175-2 Definition of soil and water conservation expenditures.
- § 1.182-3 Definition, exceptions, etc., relating to deductible expenditures.
- § 1.183-1 Activities not engaged in for profit.
- § 1.216-1 Amounts representing taxes and interest paid to cooperative housing corporation.
- § 1.221-1 Deduction for interest paid on qualified education loans after December 31, 2001.
- § 1.221-2 Deduction for interest due and paid on qualified education loans before January 1, 2002.
- § 1.245A(e)-1 Special rules for hybrid dividends.
- § 1.250(b)-1 Computation of foreign-derived intangible income (FDII).
- § 1.262-1 Personal, living, and family expenses.
Show 83 more
- § 1.263A-9 The avoided cost method.
- § 1.263A-15 Effective dates, transitional rules, and anti-abuse rule.
- § 1.264-2 Single premium life insurance, endowment, or annuity contracts.
- § 1.264-4 Other life insurance, endowment, or annuity contracts.
- § 1.267A-5 Definitions and special rules.
- § 1.267(a)-1 Deductions disallowed.
- § 1.267(a)-2T Temporary regulations; questions and answers arising under the Tax Reform Act of 1984 (temporary).
- § 1.381(c)(20)-1 Carryforward of disallowed business interest.
- § 1.382-2 General rules for ownership change.
- § 1.382-5 Section 382 limitation.
- § 1.382-6 Allocation of income and loss to periods before and after the change date for purposes of section 382.
- § 1.383-1 Special limitations on certain capital losses and excess credits.
- § 1.446-3 Notional principal contracts.
- § 1.448-2 Limitation on the use of the cash receipts and disbursements method of accounting for taxable years beginning after December 31, 2017.
- § 1.469-0 Table of contents.
- § 1.469-2 Passive activity loss.
- § 1.469-2T Passive activity loss (temporary).
- § 1.469-4 Definition of activity.
- § 1.469-7 Treatment of self-charged items of interest income and deduction.
- § 1.469-11 Applicability date and transition rules.
- § 1.636-1 Treatment of production payments as loans.
- § 1.663(c)-5 Examples.
- § 1.701-2 Anti-abuse rule.
- § 1.704-1 Partner's distributive share.
- § 1.809-6 Modifications.
- § 1.860C-2 Determination of REMIC taxable income or net loss.
- § 1.861-8 Computation of taxable income from sources within the United States and from other sources and activities.
- § 1.861-9 Allocation and apportionment of interest expense and rules for asset-based apportionment.
- § 1.861-9T Allocation and apportionment of interest expense (temporary).
- § 1.861-10T Special allocations of interest expense (temporary).
- § 1.861-12 Characterization rules and adjustments for certain assets.
- § 1.863-4 Certain transportation services.
- § 1.871-14 Rules relating to repeal of tax on interest of nonresident alien individuals and foreign corporations received from certain portfolio debt investments.
- § 1.881-3 Conduit financing arrangements.
- § 1.882-5 Determination of interest deduction.
- § 1.884-4 Branch-level interest tax.
- § 1.901-2 Income, war profits, or excess profits tax paid or accrued.
- § 1.911-4 Determination of housing cost amount eligible for exclusion or deduction.
- § 1.951A-4 Tested interest expense and tested interest income.
- § 1.951A-5 Treatment of GILTI inclusion amounts.
- § 1.987-4 Determination of net unrecognized section 987 gain or loss of a section 987 QBU.
- § 1.987-10 Transition rules.
- § 1.988-2 Recognition and computation of exchange gain or loss.
- § 1.988-5 Section 988(d) hedging transactions.
- § 1.1055-1 General rule with respect to redeemable ground rents.
- § 1.1256(e)-2 Special rules for syndicates.
- § 1.1275-1 Definitions.
- § 1.1275-2 Special rules relating to debt instruments.
- § 1.1275-6 Integration of qualifying debt instruments.
- § 1.1287-1 Denial of capital gains treatment for gains on registration-required obligations not in registered form.
- § 1.1362-3 Treatment of S termination year.
- § 1.1368-1 Distributions by S corporations.
- § 1.1377-1 Pro rata share.
- § 1.1382-2 Taxable income of cooperatives; treatment of patronage dividends.
- § 1.1411-4 Definition of net investment income.
- § 1.1411-10 Controlled foreign corporations and passive foreign investment companies.
- § 1.1502-13 Intercompany transactions.
- § 1.1502-21 Net operating losses.
- § 1.1502-36 Unified loss rule.
- § 1.1502-59A Application of section 59A to consolidated groups.
- § 1.1502-80 Applicability of other provisions of law.
- § 1.1502-90 Table of contents.
- § 1.1502-91 Application of section 382 with respect to a consolidated group.
- § 1.1502-95 Rules on ceasing to be a member of a consolidated group (or loss subgroup).
- § 1.1502-98 Coordination with sections 383 and 163(j).
- § 1.1502-99 Effective/applicability dates.
- § 1.1503(d)-7 Examples.
- § 1.1504-4 Treatment of warrants, options, convertible obligations, and other similar interests.
- § 1.6045-1 Returns of information of brokers and barter exchanges.
- § 1.6049-4 Return of information as to interest paid and original issue discount includible in gross income after December 31, 1982.
- § 1.6049-5 Interest and original issue discount subject to reporting after December 31, 1982.
- § 1.6049-8 Interest and original issue discount paid to certain nonresident aliens.
- § 1.6050H-1 Information reporting of mortgage interest received in a trade or business from an individual.
- § 1.6050H-3 Information reporting of mortgage insurance premiums.
- § 1.6050P-1 Information reporting for discharges of indebtedness by certain entities.
- § 1.7872-15 Split-dollar loans.
- § 3.7 Tax treatment of nonqualified withdrawals.
- § 5e.274-8 Travel expenses of Members of Congress.
- § 6a.103A-2 Qualified mortgage bond.
- § 46.4701-1 Tax on issuer of registration-required obligation not in registered form.
- § 301.6404-3 Abatement of penalty or addition to tax attributable to erroneous written advice of the Internal Revenue Service.
- § 301.6621-2T Questions and answers relating to the increased rate of interest on substantial underpayments attributable to certain tax motivated transactions (temporary).
- § 601.801 Purpose and statutory authority.
Amendment history
From the source credit and the official notes, newest first.
- Amended by Pub. L. 119–21Parts changed in 2025: (h)(3)(F) (h)(3)(F)(i) (h)(3)(F)(i)(III) (h)(3)(F)(ii) (h)(4) (j)(5) (j)(8)(A)(v) (j)(8)(A)(vi) (j)(9)(C) (j)(10)
- Amended by Pub. L. 116–260Parts changed in 2020: (h)(3)(E)(iv)(I) (j)(10)
- Amended by Pub. L. 116–136
- Amended by Pub. L. 116–94Parts changed in 2019: (h)(3)(E)(iv)(I)
- Amended by Pub. L. 115–141Parts changed in 2018: (d)(4)(E) (e)(1) (e)(4) (e)(5)(C)(ii) (h)(3)(E)(iv)(I)
- Amended by Pub. L. 115–123
- Amended by Pub. L. 115–97Parts changed in 2017: (h)(3)(F) (j)
- Amended by Pub. L. 114–113Parts changed in 2015: (h)(3)(E)(iv)(I)
- Amended by Pub. L. 113–295Parts changed in 2014: (d)(6) (h)(3)(E)(iv)(I) (h)(4)(F) (h)(5)
- Amended by Pub. L. 112–240Parts changed in 2013: (h)(3)(E)(iv)(I) (h)(4)(E)(i)
- Amended by Pub. L. 111–312Parts changed in 2010: (f)(2)(A)(ii) (f)(2)(B) (f)(2)(B)(i) (f)(2)(C) (f)(3) (h)(3)(E)(iv)(I)
- Amended by Pub. L. 111–147
- Amended by Pub. L. 111–5Parts changed in 2009: (e)(5)(F) (i)(1)
- Amended by Pub. L. 110–142Parts changed in 2007: (h)(3)(E)(iv)(I)
- Amended by Pub. L. 109–432Parts changed in 2006: (h)(3)(E) (h)(4)(E) (j)(8) (j)(9)
- Amended by Pub. L. 109–222
- Amended by Pub. L. 109–135Parts changed in 2005: (j)(6)(A)(i)(III)
- Amended by Pub. L. 108–357Parts changed in 2004: (e)(3)(B) (l)(2) (l)(3) (l)(4) (m)
- Amended by Pub. L. 108–27Parts changed in 2003: (d)(4)(B)
- Amended by Pub. L. 106–170Parts changed in 1999: (j)(3)(C)
- Amended by Pub. L. 105–277Parts changed in 1998: (h)(2)(F)
- Amended by Pub. L. 105–34Parts changed in 1997: (h)(2)(E) (h)(4)(A)(i)(I) (j)(2)(B)(iii) (k) (l) (m)
- Amended by Pub. L. 104–188Parts changed in 1996: (j)(1)(B) (j)(6)(E)(ii) (j)(7)
- Amended by Pub. L. 103–66Parts changed in 1993: (d)(4)(B) (j) (j)(3) (j)(5)(B) (j)(6)(D)
- Amended by Pub. L. 101–508Parts changed in 1990: (e)(5)(A) (i)(3) (i)(3)(B) (j)(2)(A)(ii) (j)(2)(C)
- Amended by Pub. L. 101–239Parts changed in 1989: (e)(5) (i) (j) (k)
- Amended by Pub. L. 100–647Parts changed in 1988: (d)(3)(A) (d)(4)(B) (d)(6)(A) (e)(2)(B) (h)(2)(A) (h)(2)(E) (h)(3)(C) (h)(4) (h)(4)(A) (h)(4)(B) (h)(4)(C) (h)(5) (h)(6) (i)(2)
- Amended by Pub. L. 100–203Parts changed in 1987: (d)(4)(E) (h)(3) (h)(4)
- Amended by Pub. L. 99–514Parts changed in 1986: (d) (e)(2)(C) (e)(3)(A) (e)(5) (f)(3) (h) (i)(2)
- Amended by Pub. L. 98–369Parts changed in 1984: (d)(3)(D) (e)(1) (e)(2) (e)(3) (e)(4) (f)(2)(C)(i) (g)
- Amended by Pub. L. 97–354Parts changed in 1982: (d)(4) (e) (f) (g)
- Amended by Pub. L. 97–248
- Amended by Pub. L. 94–455Parts changed in 1976: (b)(1) (d)(1) (d)(2) (d)(3)(A) (d)(3)(B)(iii) (d)(3)(E) (d)(4)(B) (d)(5) (d)(6) (d)(7)
- Amended by Pub. L. 92–178Parts changed in 1971: (d)(1)(B) (d)(3)(C) (d)(4)(A)(i) (d)(7)
- Amended by Pub. L. 91–172Parts changed in 1969: (d)
- Amended by Pub. L. 88–272Parts changed in 1964: (b)(1)
- Enacted by Pub. L. 88–9Parts changed in 1963: (c)
Where it sits in the Code
- Subtitle A Income Taxes
- Chapter 1 NORMAL TAXES AND SURTAXES
- Subchapter B Computation of Taxable Income
- Part VI ITEMIZED DEDUCTIONS FOR INDIVIDUALS AND CORPORATIONS
Nearby sections
Official notes
The Law Revision Counsel's notes for this section (amendments, effective dates and related laws) are long, so they have their own page.