Excess Business Losses Under The One Big Beautiful Bill

On July 4, 2025, President Trump signed the One Big Beautiful Bill into law. The legislation makes far-reaching changes to the federal tax code and other parts of the government. The bill cuts certain taxes, changes funding for a number of federal programs, raises the debt ceiling by $5 trillion, and extends many of the provisions originally introduced in the 2017 Tax Cuts and Jobs Act (TCJA).

Excess Business Losses

Under current tax law, total losses from businesses that can offset other income of the taxpayer is limited to $250,000 ($500,000 for married filing joint). Any losses in excess of the limit are treated as net operating loss carryovers available to be used in the following year. These limitations were supposed to expire after 2028. However, the One Big Beautiful Bill makes the excess loss provisions permanent.

It’s important to recognize that these limitations are sometimes to the taxpayer’s benefit. Without the limitation, a large business loss could sometimes offset all of a taxpayer’s income for a year, including income that is taxed at low income tax rates and even may be taxed at a 0% rate. With these limitations in place, the loss is sometimes used against income taxed at high rates in a different year. Your tax advisor can help you estimate how these provisions will affect your tax liability.

Contact Us

With major changes to tax rules, both individuals and business owners are encouraged to revisit tax strategies. A proactive approach will be essential to capture benefits, manage risk, and stay compliant as the new provisions take effect. If you have questions about the information outlined above, or need assistance with another tax issue, WhippleWood CPAs can help. For additional information call 303-989-7600 or click here to contact us. We look forward to speaking with you soon.