DEFINITION of 'Business Interest Expense'

The cost of interest that is charged on business loans used to operate the business. Business interest is deductible as an ordinary business expense. The loan must be used to either purchase assets for the business or pay for business expenses. If any amount of the loan is used for nonbusiness purposes, then the amount of deductible interest from the loan must be reduced proportionately.

BREAKING DOWN 'Business Interest Expense'

Business expenses must be deducted on the proper tax form that correlates to the business for which the expenditure was made. Taxpayers who incur corporate business expenses cannot deduct this expense on their personal returns. The business must reimburse the taxpayer and then deduct the reimbursement on the corporate return.

RELATED TERMS
  1. IRS Publication 535 - Business ...

    A document published by the Internal Revenue Service (IRS) that ...
  2. Interest Deduction

    A deduction for taxpayers who pay certain types of interest. ...
  3. Business Expenses

    Any expenses incurred in the ordinary course of business. Business ...
  4. Form 2106: Employee Business Expenses

    A tax form distributed by the Internal Revenue Service (IRS) ...
  5. Investment Interest Expense

    Any amount of interest that is paid on loan proceeds used to ...
  6. Form 4952: Investment Interest ...

    A tax form distributed by the Internal Revenue Service (IRS) ...
Related Articles
  1. Small Business

    Writing Off the Expenses of Starting Your Own Business

    Learn how to navigate the complicated rules for writing off the expenses of starting your own business. It could save you a lot of money.
  2. Taxes

    10 Tax Benefits for the Self-Employed

    Running your own business has both personal and financial perks.
  3. Taxes

    7 Expenses You Won't Believe Are Deductible

    Many taxpayers would be surprised to discover some of the things that qualify as legitimate deductions.
  4. Taxes

    An Overview of Itemized Deductions

    Not taking the standard deduction this year could save you hundreds of dollars.
  5. Personal Finance

    Calculating Interest Expense

    Interest expense is the cost of borrowing money.
  6. Taxes

    Top Tax Tips to Deduct Investment Management Fees

    Investment expenses can be deducted by those who meet three main criteria. Here's what they are and how they work.
  7. Insurance

    What's a Deductible?

    With insurance, a deductible is the amount of money the insured pays out-of-pocket before the insurance company pays for the loss.
  8. Personal Finance

    Getting Government Loans For Your Small Business

    Would a government loan provide a more cost-effective way to finance your business? See whether your company qualifies for a government loan.
  9. Taxes

    Want A Bigger Tax Refund? Don't Itemize

    Six reasons why many taxpayers can save money and time by claiming the standard deduction.
  10. Taxes

    Top Tax Deductions For Brokers

    If you are paying out of pocket, you can make your business expenses work for you at tax time.
RELATED FAQS
  1. Are personal loans tax deductible?

    Find out whether interest on personal loans is tax deductible and what types of loan interest can be used to reduce your ... Read Answer >>
  2. What are the most common business deductions and expenses for small businesses?

    Learn about some of the most common business tax deductions available to small businesses that can reduce net business expenses. Read Answer >>
  3. What are the most common operating expenses for an online business?

    Learn about the common expenses of online businesses and find out about some of the tax implications of new business expenses ... Read Answer >>
  4. How is the deductible I paid for my insurance claim treated for tax purposes?

    Find out how your health insurance deductible is treated for tax purposes and under what conditions you may be able to deduct ... Read Answer >>
  5. In what instances does overhead qualify for certain tax allowances?

    Find out about instances in which overhead expenses qualify for tax allowances, including some common examples of tax-deductible ... Read Answer >>
  6. Is the interest on my student loan tax deductible on my federal income taxes?

    Find out how you can deduct interest payments for qualified student loans from your income taxes, and learn about restrictions ... Read Answer >>
Hot Definitions
  1. North American Free Trade Agreement - NAFTA

    A regulation implemented on Jan. 1, 1994, that decreased and eventually eliminated tariffs to encourage economic activity ...
  2. Benchmark

    A standard against which the performance of a security, mutual fund or investment manager can be measured.
  3. Mobile Wallet

    Mobile wallet is a virtual wallet that stores payment card information on a mobile device.
  4. Leverage

    1. The use of various financial instruments or borrowed capital, such as margin, to increase the potential return of an investment. ...
  5. Trumponomics

    Trumponomics is a term for the economic policies of President Donald Trump.
  6. Universal Health Care Coverage

    An organized healthcare system that provides healthcare benefits to all persons in a specified region. Many countries, such ...
Trading Center