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) is a limitation on high income noncorporate taxpayers. It affects taxpayers that have non-business income (wages, capital gains, etc.) over annual thresholds and business losses. EBL limits the amount of business losses that offsets 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. (This provision was set to expire after 2028 but has been made a permanent change to the tax code.)
Additional Information:
Desktop: Form 461 - Limitation on Business Losses
ProWeb: Form 461 - Limitation on Business Losses
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