Federal IRC § 163(j) limits a taxpayer’s net interest expense to 30% of taxable income (with adjustments). The Michigan Department of Treasury and Pennsylvania Department of Revenue take the position that the limitation applies to their respective corporate income taxes, and that taxpayers must compute the limit on a separate-company basis. This separate-company application differs from the consolidated limitation most taxpayers apply on their federal return, and can be particularly detrimental for taxpayers that borrow externally or manage group financing from a company with limited operations. This separate-company application is particularly problematic in Michigan because the state requires combined reporting. But, there may be a solution.