The One Big Beautiful Bill Act, enacted on July 4, 2025 as Public Law 119-21, introduced a wide range of changes that will impact tax returns for the 2025 tax year and beyond. The Excess Business Loss provision has been made permanent in the tax code.
Excess Business Loss (EBL) limitations apply to high-income noncorporate taxpayers with excess business losses. It affects taxpayers that have non-business income (wages, capital gains, etc.) over annual thresholds and business losses. Excess business loss limitations reduce the amount of business losses that can offset non-business income. It applies to sole proprietors, partners, and S corporation shareholders.
The EBL thresholds in 2025 are:
- $313,000 for single filers
- $626,000 for joint filers
Once these loss thresholds have been reached, any losses from businesses are considered NOLs and carry forward. (The 2025 One Big Beautiful Bill Act permanently extends excess business loss limitations for applicable taxpayers.)
Additional Information:
Desktop: Form 461 - Limitation on Business Losses
ProWeb: Form 461 - Limitation on Business Losses
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