Net Operating Loss (NOL) Calculator
On $120,000.00 in 2027, $25,000.00 and $110,000.00 losses deduct $101,000.00.
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Your NOL and carryover
2026 NOL deduction
$101,000.00
Taxable after NOL
$19,000.00
Carryforward to 2027
$34,000.00
Your 2026 NOL deduction is $101,000.00, reducing modified taxable income from $120,000.00 to $19,000.00.
Pre-2018 carryovers absorb $25,000.00 first at 100%, and 26 U.S.C. 172(a)(2)(B) caps post-2017 carryovers at $76,000.00 (80% of the remaining $95,000.00).
$34,000.00 remains to carry forward to 2027.
Your return and loss details
- taxable income cap base = $120,000.00
- pre-2018 deduction = min($25,000.00, $120,000.00) = $25,000.00
- post-2017 80% cap = 80% × $95,000.00 = $76,000.00
- post-2017 deduction = min($110,000.00, $76,000.00) = $76,000.00
- NOL deduction = $25,000.00 + $76,000.00 = $101,000.00
NOL deducted and ending carryforward by year
Absorption by loss vintage
| Vintage / item | Cap and window | Available | Deducted / used | Carried forward | Expired / disallowed |
|---|---|---|---|---|---|
| 2017 | Pre-2018 100% offset (through 2037) | $25,000.00 | $25,000.00 | $0.00 | $0.00 |
| 2023 | Post-2017 80% cap (indefinite) | $110,000.00 | $76,000.00 | $34,000.00 | $0.00 |
Under 26 U.S.C. 172(b)(2), the 2 rows absorb oldest vintage first from 2017 through 2023: $25,000.00 from pre-2018 rows, $76,000.00 from post-2017 rows, and $34,000.00 carried to 2027.
Multi-year carryforward schedule
| Tax year | Income before NOL | NOL deducted | Taxable after NOL | Ending carryforward |
|---|---|---|---|---|
| 2026 | $120,000.00 | $101,000.00 | $19,000.00 | $34,000.00 |
| 2027 | $120,000.00 | $34,000.00 | $86,000.00 | $0.00 |
At $120,000.00 of projected annual income, the $34,000.00 carryforward after 2026 is fully deducted by 2027.
NOL deduction across current-year taxable income
Across these income levels, the NOL deduction rises from $0.00 at $0.00 to $135,000.00 by $180,000.00 and equals $135,000.00 above that.
| Taxable income before NOL | NOL deduction | Taxable income after | Carryforward left |
|---|---|---|---|
| $0 | $0.00 | $0.00 | $135,000.00 |
| $25,000 | $25,000.00 | $0.00 | $110,000.00 |
| $50,000 | $45,000.00 | $5,000.00 | $90,000.00 |
| $80,000 | $69,000.00 | $11,000.00 | $66,000.00 |
| $120,000 (closest to your input) | $101,000.00 | $19,000.00 | $34,000.00 |
| $150,000 | $125,000.00 | $25,000.00 | $10,000.00 |
| $180,000 | $135,000.00 | $45,000.00 | $0.00 |
| $220,000 | $135,000.00 | $85,000.00 | $0.00 |
Ending carryforward by projected future annual income
After 10 years of projection, annual income of $25,000.00 or higher brings the ending carryforward from $34,000.00 (at $0.00 per year) down to $0.00.
| Projected annual income | Carryforward at horizon end |
|---|---|
| $0 | $34,000.00 |
| $25,000 | $0.00 |
| $50,000 | $0.00 |
| $75,000 | $0.00 |
| $100,000 | $0.00 |
| $120,000 (closest to your input) | $0.00 |
| $160,000 | $0.00 |
| $220,000 | $0.00 |
How the federal NOL deduction and 80% limit work
A federal net operating loss (NOL) occurs when tax deductions beat gross income after the adjustments in 26 U.S.C. 172(d). You cannot claim that loss twice, and you get no cash refund unless a carryback applies. Under 26 U.S.C. 172, you carry the unused loss to another tax year to cut taxable income there.
Two tiers run side by side under 26 U.S.C. 172(a)(2) for tax years starting after 2020. Losses from years starting before 2018 offset up to 100% of income and run "to each of the 20 taxable years following the taxable year of the loss" under 26 U.S.C. 172(b)(1)(A)(ii)(I). Except for non-life insurers under 26 U.S.C. 172(b)(1)(C)(ii) and 172(f), losses from years starting after 2017 never expire, and their write-off cannot top 80% of income left after pre-2018 NOLs.
Oldest losses go first. Under 26 U.S.C. 172(b)(2), each NOL "shall be carried to the earliest of the taxable years to which (by reason of paragraph (1)) such loss may be carried." On $120,000.00 of 2027 income, the $25,000.00 2017 loss absorbs first dollar-for-dollar, leaving $95,000.00 of remaining income. The 80% cap then holds the post-2017 deduction to $76,000.00 on top of that older vintage.
Modified taxable income, vintage caps and 20-year expiry
Section 172(a)(2)(B)(ii)(I) bases the 80% cap on "taxable income computed without regard to the deductions under this section and sections 199A and 250." That stops a loop with the QBI deduction calculator under section 199A and the corporate section 250 write-off. With post-2017 losses alone, a $120,000.00 carryover on $100,000.00 of income gives an $80,000.00 deduction and leaves $20,000.00 taxed.
Three windows govern carryovers on 2025 to 2027 returns. Pre-2018 losses carried back 2 years under former 26 U.S.C. 172(b)(1)(A)(i), before Public Law 115-97 section 13302(b)(1)(A). Under 26 U.S.C. 172(b)(1)(A)(ii)(I), those pre-2018 losses carry forward 20 years. A $40,000.00 loss from 2006 against $15,000.00 of 2026 income deducts $15,000.00 in year 20, and $25,000.00 expires after 2026. The CARES Act (26 U.S.C. 172(a)(1) and 172(b)(1)(D)) paused the post-2017 percentage cap before 2021 and gave 2018–2020 losses a 5-year carryback. Any unused 2018–2020 balance now carries forward indefinitely (or for 20 years for a non-life insurer under 26 U.S.C. 172(b)(1)(C)(ii)).
For losses after 2020, 26 U.S.C. 172(b)(1)(B) and (C) allow 2-year carrybacks only for farming losses and non-life insurers. Under 26 U.S.C. 172(f), a non-life insurer is also exempt from the post-2017 percentage cap. On $100,000.00 of income, it deducts $100,000.00 from a $110,000.00 2023 loss and carries $10,000.00 forward within 20 years.
How individuals figure a new NOL on Form 172 and Form 461
The IRS About Publication 536 page carries the notice "Publication 536 will no longer be revised -- 24-OCT-2024." Noncorporate filers now figure a new NOL on Form 172 (Rev. December 2024), and Form 1045 line 1a reads "Net operating loss (NOL) (Form 172)." On Form 172 Part I line 1, individuals "subtract your standard deduction or itemized deductions from your adjusted gross income (AGI) and enter it here." Form 172 line 1 also states: "For estates and trusts, enter taxable income increased by the total of the charitable deduction, income distribution deduction, and exemption amount." Individual NOL mode covers Form 1040 individuals only, while estates and trusts can deduct existing carryovers in Carryforward Mode.
Negative taxable income alone does not guarantee an NOL. Under 26 U.S.C. 172(d)(2) and (d)(4), you add back excess nonbusiness deductions and the Section 1202 stock-gain exclusion. You also add back capital losses above capital gains, tracked in the capital loss carryover calculator. On Form 172 line 24, "If the result is zero or more, you don’t have an NOL." With both a Schedule D net loss (line 16) and Section 1202 gain (line 17), printed Form 172 line 24 adds all of line 17. When that changes the NOL, this page computes the 26 U.S.C. 172(d)(2) NOL and shows the lower printed Form 172 figure beside it. Because Form 172 instructions direct filers to use Form 172 and give no rule for that gap, ask a tax professional which figure to file. Employee W-2 pay counts as business income on Form 172, so wages absorb business losses first.
Before you compute an NOL, business losses must clear basis, the at-risk loss limit calculator (section 465), and the passive loss allocation calculator (section 469). Next comes Form 461 under 26 U.S.C. 461(l). As the Instructions for Form 461 (2025) state: "First, apply the at-risk rules; next, apply the passive activity loss rules; and then apply the excess business loss rules." Under 26 U.S.C. 461(l)(3)(A), Form 461 figures business losses "without regard to any deductions, gross income, or gains attributable to any trade or business of performing services as an employee."
Business loss above the Form 461 cap goes on Schedule 1 (Form 1040) line 8p ("Section 461(l) excess business loss adjustment"). Prior NOL carryovers go on Schedule 1 line 8a ("Net operating loss"). Under 26 U.S.C. 461(l)(2), that disallowed Form 461 loss "shall be treated as a net operating loss for the taxable year for purposes of determining any net operating loss carryover under section 172(b) for subsequent taxable years." Check each Form 461 line in the excess business loss limitation calculator.
Why the 2026 Form 461 threshold is lower than 2025
Rev. Proc. 2024-40 section 2.32 sets the 2025 Form 461 cap at $313,000.00 ($626,000.00 joint): "For taxable years beginning in 2025, in determining a taxpayer’s excess business loss, the amount under § 461(l)(3)(A)(ii)(II) is $313,000 ($626,000 for joint returns)." Public Law 119-21 section 70601 made section 461(l) permanent and reset the base year in 26 U.S.C. 461(l)(3)(C) to 2024. Rev. Proc. 2025-32 section 4.31 therefore sets a lower 2026 cap: "For taxable years beginning in 2026, in determining a taxpayer's excess business loss, the amount under § 461(l)(3)(A)(ii)(II) is $256,000 ($512,000 for joint returns)."
That $57,000.00 single-filer drop hits owners who also earn high W-2 pay. Take a single owner with $85,000.00 of business revenue, $460,000.00 of expenses ($375,000.00 net loss), and $300,000.00 of wages. In 2025, the higher single cap lets the loss wipe out all $300,000.00 of wages and creates $75,000.00 of total carryforward ($13,000.00 on Form 172 plus $62,000.00 of disallowed excess). In 2026, the lower single cap leaves $44,000.00 of adjusted gross income ($27,900.00 of taxable income after the $16,100.00 single standard deduction) and shifts $119,000.00 into a 2027 NOL carryforward.
Federal NOL deduction and loss-year formulas
pre-2018 deduction = min(live pre-2018 carryovers, max(0, modified TI)) post-2017 80% cap = 80% × max(0, modified TI − live pre-2018 carryovers) total NOL deduction = pre-2018 deduction + min(post-2017 carryovers, post-2017 cap) [100% of TI for 172(f) non-life insurers] Form 461 EBL = max(0, business deductions − business gross income − allowed business capital gain − threshold) 26 U.S.C. 172(c)/(d) NOL = max(0, −(unadjusted TI + excess nonbusiness deductions + disallowed capital losses + max(0, Sec. 1202 gain − Sch. D net loss)))
Worked examples from IRS publications and forms
IRS Publication 536 retail record business example. A single shop owner has $67,000.00 of sales and $72,000.00 of business costs ($5,000.00 net loss). She also has $1,225.00 of wages, $425.00 of interest, a $2,000.00 business land gain, a $1,000.00 stock loss, and a $13,850.00 standard deduction. Form 172 line 1 is −$16,200.00. Adding back $13,425.00 of excess nonbusiness write-offs ($13,850.00 minus $425.00) and the $1,000.00 stock loss ($14,425.00 total) leaves a $1,775.00 Form 172 NOL, matching Publication 536 (2023).
Mixed farming and nonfarm NOL (2025 Form 1045 instructions). A sole owner has a $50,000.00 Form 172 NOL in 2025: $35,000.00 from farming under section 263A(e)(4) and $15,000.00 from another shop. Claiming the carryback sends $35,000.00 back 2 years to 2023 on Form 1045 under 26 U.S.C. 172(b)(1)(B). The $15,000.00 nonfarm share carries forward to 2026.
Corporate DRD cliff (IRS Publication 542 Examples 1 and 2). A C corporation gets $100,000.00 of dividends from a 20%-owned firm ($65,000.00 full 65% DRD). With a $75,000.00 operating loss, line 28 is $25,000.00 and full DRD creates a $40,000.00 NOL, so 26 U.S.C. 246(b)(2) unlocks all $65,000.00. With a $30,000.00 operating loss, line 28 is $70,000.00 and full DRD leaves $5,000.00 (no NOL). Section 246(b)(1) caps DRD at $45,500.00 and leaves $24,500.00 taxed.
Corporate Form 1120 and Form 1120-PC NOLs and the Section 246(b)(2) dividend cliff
Corporations skip Form 461 and the nonbusiness caps of 26 U.S.C. 172(d)(2) and (d)(4). On Form 1120, line 28 shows "Taxable income before net operating loss deduction and special deductions." Form 1120 line 29a takes prior NOLs, and line 29b takes Schedule C dividends-received deductions (DRD). Line 30 income is taxed at 21% under 26 U.S.C. 11(b). Non-life insurers taxed under section 831 file Form 1120-PC instead. On Form 1120-PC Schedule A, line 35 is the pre-DRD subtotal and line 36a takes Schedule C line 30 deductions. Schedule A line 36b takes the NOL deduction, and line 37 reports taxable income. Schedule F line 12 adds lines 9–11: section 832(b)(5)(B) tax-exempt interest and Schedule C line 27 DRD, plus section 264(f) policy cash-value increases. Schedule F line 13 multiplies line 12 by 25% ("5.25% divided by the highest corporate tax rate") under section 832(b)(5)(B). Schedule F line 14 subtracts line 13 from line 8 losses incurred to enter deductible losses on Schedule A line 26.
Under 26 U.S.C. 246(b)(1) and (3), the 65% dividend write-off cannot top 65% of pre-DRD income after wholly deductible dividends. The 50% write-off cannot top 50% of that base minus gross 20-percent-owned dividends. Yet 26 U.S.C. 246(b)(2) sets a sharp cliff: "Paragraph (1) shall not apply for any taxable year for which there is a net operating loss (as determined under section 172)." The Instructions for Form 1120 (2025) Schedule C line 9 state: "in a year in which an NOL occurs, the limitation in section 246(b)(1) does not apply even if the loss is created by the dividends-received deduction." Form 1120-PC Schedule C line 26, column (b) applies the same rule to Schedule A line 35.
On Form 1120, $220,000.00 of operating revenue, $340,000.00 of costs, and $100,000.00 of 20-percent-owned dividends leave −$20,000.00 on line 28. Section 246(b)(2) unlocks the full $65,000.00 DRD and creates an $85,000.00 NOL carryforward. Test dividend tiers in the dividends received deduction calculator. After a 50-point stock ownership shift, check your annual cap in the Section 382 NOL limitation calculator.
Assumptions, scope boundaries and limits
- Federal scope only under 26 U.S.C. 172, 246(b), and 461(l), plus the IRS forms and revenue procedures cited in Sources (including Rev. Proc. 2024-40 and Rev. Proc. 2025-32). State conformity, state caps, and state carryback bans are out of scope.
- In Carryforward Mode, enter each prior loss at the dollar balance still unused entering this tax year. Under 26 U.S.C. 172(b)(2), carryovers sort oldest loss year first. Ties on the same loss year keep their line order.
- Individual NOL mode models individual filers only. Estates and trusts figure Form 172 line 1 from Form 1041 ("taxable income increased by the total of the charitable deduction, income distribution deduction, and exemption amount") and can use Carryforward Mode. Section 1202 excluded stock gain offsets gross nonbusiness capital gains first under the Form 461 gain cap of 26 U.S.C. 461(l)(3)(B)(ii). When Section 1202 gain and a Schedule D net loss produce different NOLs under 26 U.S.C. 172(d)(2) and printed Form 172, the page reports both. Because Form 172 instructions direct filers to use Form 172 without addressing that gap, ask a tax professional which figure to file.
- When you claim a 2-year carryback, the tool splits out the carryback share ($35,000.00 in the farm case). If the two prior years do not absorb all of it, add the leftover balance back after completing Form 172 Part II or Form 1139.
- Out of scope: REIT rules under 26 U.S.C. 172(d)(6), consolidated SRLY and section 382 limits, and section 965 years. Property-casualty Schedule E unearned premiums, Schedule F section 846 loss discounting, electing small insurers, AMT adjustments, joint-to-separate spouse splits, section 246A debt-financed stock, and Form 172 Part II carryback deductions are also excluded.
These figures are estimates for learning and planning, not financial, tax, legal or investment advice. Terms of use.
What to do with your NOL figures
To waive a 2-year farming or non-life insurer carryback under 26 U.S.C. 172(b)(3), individuals, estates, and trusts attach a section 172(b) statement to a timely return (including extensions). Form 1120 filers check Schedule K, Item 11. Form 1120-PC insurers "check the box on line 10 and file the tax return by its due date, including extensions" on Schedule I and "Do not attach the statement described in Temporary Regulations section 301.9100-12T". On a consolidated return, "the statement required by Regulations section 1.1502-21(b)(3) must be attached" or the waiver is invalid. Under 26 U.S.C. 172(b)(3), "Such election, once made for any taxable year, shall be irrevocable for such taxable year." After a timely return without electing, Form 172 and Form 1120-PC instructions allow an amended return within 6 months of the due date (excluding extensions). Individuals, estates, and trusts attach the statement marked "Filed pursuant to section 301.9100-2" to that amended return. Form 1120-PC instructions tell insurers to "Attach the election to the amended return".
Under 26 U.S.C. 6411, file Form 1045 (individuals, estates, and trusts) or Form 1139 (corporations) within 12 months after the loss year ends for a 90-day tentative carryback refund. After 12 months, file Form 1040-X, an amended Form 1041, or Form 1120-X within 3 years after the loss-year return's due date (including extensions) under 26 U.S.C. 6511(d)(2)(A).
Recompute your QBI write-off and tax bill on the income left after your NOL. In the default 2027 run, the $101,000.00 deduction leaves $19,000.00 for the QBI deduction calculator and the federal income tax calculator.
Save every loss-year return, Form 172, Form 461, and carryover sheet until 3 years after the last carryforward dollar is used or expires, as the Form 172 instructions direct.
Questions about federal net operating losses
Can I carry a 2025, 2026 or 2027 net operating loss back to prior tax years?
Only in two narrow cases under 26 U.S.C. 172(b)(1)(A)-(C). Losses after 2020 carry back 2 years only for farming losses under section 172(b)(1)(B) or non-life insurers under section 172(b)(1)(C). You can waive either carryback under section 172(b)(3). Every other post-2020 NOL carries forward only.
What happens when pre-2018 carryovers use up all of my taxable income?
Under 26 U.S.C. 172(a)(2) and 172(b)(2), live pre-2018 losses absorb first dollar-for-dollar against modified taxable income. For non-insurer returns, post-2017 losses then offset at most 80% of the income left above those pre-2018 losses. When pre-2018 carryovers equal or exceed your modified taxable income, no remaining income pool is left, so every dollar of post-2017 loss carries forward untouched.
Can an LLC partnership or S corporation claim a net operating loss?
Generally not. As the Form 172 instructions state: "Partnerships and S corporations generally can’t use an NOL." Instead, each partner or shareholder reports their Schedule K-1 share of business income and deductions on their personal return, clears basis, at-risk, passive loss, and Form 461 caps, and figures any resulting NOL individually.
How do W-2 wages interact with Form 461 and Form 1040?
Under 26 U.S.C. 461(l)(3)(A), employee W-2 pay does not count as business income on Form 461. Your net non-wage business loss is capped at the annual threshold first, so only the allowed portion offsets W-2 wages on Form 1040 this year. Section 461(l)(2) converts the disallowed excess into next year's NOL carryforward.
Why can $1.00 of extra corporate deduction unlock a larger dividends-received deduction?
Under 26 U.S.C. 246(b)(1) and (3), partial dividend write-offs cannot top tier percentages of pre-DRD income on Form 1120 line 28 or Form 1120-PC Schedule A line 35. That income base is reduced first by wholly deductible dividends and, for the lower tier, by gross 20-percent-owned dividends. Under 26 U.S.C. 246(b)(2), that income cap vanishes as soon as full tentative DRD creates even a $0.01 NOL, unlocking the entire Schedule C dividend deduction.
Does this calculator cover state net operating loss deductions?
No. This page models federal NOLs under 26 U.S.C. 172 and related Internal Revenue Code sections only. States write their own tax codes and may skip the federal 80% cap, set shorter carryforward lives, pause NOL write-offs in budget years, or ban carrybacks. Check your state's tax instructions and NOL form separately.
Sources
- 26 U.S.C. 172, net operating loss deduction (Cornell LII text) (current version)
- 26 U.S.C. 461, general rule for taxable year of deduction (Cornell LII text) (current version)
- 26 U.S.C. 246, rules applying to deductions for dividends received (Cornell LII text) (current version)
- IRS, Form 172 (Rev. December 2024), Net Operating Losses (NOLs) for Individuals, Estates, and Trusts (page modified Jan 17, 2025)
- IRS, Instructions for Form 172 (Rev. December 2024), Net Operating Losses (NOLs) for Individuals, Estates, and Trusts (page modified Jan 17, 2025)
- IRS, Form 461 (2025), Limitation on Business Losses (page modified Dec 10, 2025)
- IRS, Instructions for Form 461 (2025), Limitation on Business Losses (page modified Dec 11, 2025)
- IRS, Form 1045 (2025), Application for Tentative Refund (page modified Dec 17, 2025)
- IRS, Instructions for Form 1045 (2025), Application for Tentative Refund (page modified Jan 5, 2026)
- IRS, About Publication 536, Net Operating Losses (NOLs) for Individuals, Estates, and Trusts (page reviewed Oct 3, 2026)
- IRS, Publication 536 (2023), Net Operating Losses (NOLs) for Individuals, Estates, and Trusts (page modified Jan 20, 2024)
- IRS, Schedule 1 (Form 1040) (2025), Additional Income and Adjustments to Income (page modified Jan 2, 2026)
- IRS, Form 1120 (2025), U.S. Corporation Income Tax Return (page modified Jan 8, 2026)
- IRS, Instructions for Form 1120 (2025), U.S. Corporation Income Tax Return (page modified Jan 20, 2026)
- IRS, Form 1120-PC (2025), U.S. Property and Casualty Insurance Company Income Tax Return (page modified Jan 8, 2026)
- IRS, Instructions for Form 1120-PC (2025), U.S. Property and Casualty Insurance Company Income Tax Return (page modified Jan 28, 2026)
- IRS, Publication 542 (Rev. January 2024), Corporations (page modified Feb 14, 2024)
- IRS, Revenue Procedure 2024-40, 2025 adjusted items (page modified Oct 22, 2024)
- IRS, Revenue Procedure 2025-32, 2026 adjusted items (page modified Oct 17, 2025)
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