NOL Carryforward 80% Limitation Calculator (2026)
TCJA's NOL rules (post-2017) cap carryforward usage at 80% of taxable income. NOLs carry forward indefinitely but can no longer carry back. This 2026 tool calculates the usable amount.
| NOL carryforward available | — |
| Current taxable income (before) | — |
| 80% cap (post-2017 NOL) | — |
| NOL used (lesser of NOL or cap) | — |
| Taxable income after NOL | — |
| Carryforward to next year | — |
TCJA 2018 fundamentally restructured Net Operating Loss (NOL) rules. Post-2017 NOLs carry forward indefinitely (no 20-year expiration) but cannot carry back to prior years. Annual usage is capped at 80% of taxable income before NOL. Pre-2018 NOLs keep the old rules (20-year carryforward, 100% usage, 2-year carryback) but are running out their clocks. Individuals also face the excess business loss limitation under Section 461(l).
How The 80% Cap Works
If your current-year taxable income (before NOL) is $200,000 and you have $300,000 of post-2017 NOL carryforward, you can use the LESSER of your NOL ($300K) or 80% of taxable income ($160K). Result: taxable income reduced to $40K, $140K NOL carries forward. The cap exists so businesses never reduce taxable income to zero with old losses while reporting current profits. Pre-2018 NOLs (still on books for some businesses) are not subject to the cap and can fully offset current-year income up to 100%.
Excess Business Loss For Pass-Throughs
Individuals with K-1 income from pass-through entities face Section 461(l) — the excess business loss limitation. For 2026, losses above $626,000 single / $1,252,000 married joint (inflation-adjusted) become 'excess business loss' and convert to NOL for future years (subject to the 80% cap). This prevents using a large business loss to offset wages, investment income, and other non-business income in a single year. Originally TCJA, made permanent by IRA, extended in OBBB 2026. State conformity varies — California, New Jersey, and others disallow or limit NOL deductions entirely. Always run the federal and state NOL calculation separately.
Last updated May 2026. Sources: IRS NOL Guidance.