Tax Reform changes the rules about Net Operating Losses

The Tax Cuts and Jobs Act made changes to the tax law, including Net Operating Loss (NOL) rules.

Here’s what changed:

  • For most taxpayers, NOLs arising after 2017 can only be carried forward.
  • Certain farming businesses and insurance companies (other than life insurance) can still use a two-year carryback for certain losses.
  • After Dec. 31, 2017, the net operating loss deduction is limited to 80 percent of taxable income.

Rules for existing or pre-2018 NOLs remain the same.