Tax Reform changes excess business loss limits


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December 18, 2019

The Tax Cuts and Jobs Act put a new limit on deductible business losses incurred by non-corporate taxpayers.

Losses from a trade or business are now limited to $250,000, or $500,000 for a joint return.

A trade or business includes, but is not limited to:

  • Schedule C and Schedule F activities
  • being an employee
  • certain activities reported on Schedule E

Excess losses that are no longer allowed are treated as a net operating loss and carried forward to the following taxable year. For information on how these rules apply to farmers, see the Farmer’s Tax Guide.