On May 11, 2016, North Carolina enacted S.B. 729, which modifies the state’s related party interest expense deduction from 30% to 15% of a taxpayer’s adjusted taxable income. Additionally, S.B. 729 adds a conduit exception to the interest expense limitation.
The interest expense limitation, as originally enacted in 2015, and the changes to it imposed by S.B. 729, are effective for tax years beginning on or after January 1, 2016.