What is Excess business loss limitation?
In short
Individuals and other noncorporate taxpayers can't deduct net business losses above an annual threshold ($313,000, or $626,000 on a joint return, for 2025). The disallowed excess becomes a net operating loss carryforward.
Key takeaways
- It applies after the basis, at-risk and passive activity loss limits.
- The One Big Beautiful Bill Act made the limitation permanent.
- Losses from all of the taxpayer's businesses are combined.
Where it's tested
REG: Individual Taxation: Adjustments & Deductions — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
Under the One Big Beautiful Bill Act, what is the state and local tax (SALT) deduction cap, and is it permanent?