Excess Business Loss
Beginning in 2018, for non-corporate taxpayers, the Tax Cuts and Jobs Act limits the amount of business losses that can be used to offset non-business income. Business losses are calculated by taking the taxpayer’s aggregate business deductions over their aggregate business income. If the amount exceeds $500,000 for a joint filer ($250,000 for a single filer), the “excess business loss” must be carried forward as part of the taxpayer’s net operating loss. This provision is set to expire after the 2025 tax year.
