
The Inflation Reduction Act of 2022 has a provision to extend the Excess Business Loss rules for two more years.
As part of the final amendments to the Inflation Reduction Act of 2022 (IRA), Senator Thune had proposed extending the limit on the State and Local Tax Deduction (SALT) for one year. However, Senator Warner was able to eliminate this proposal and replace it with a two-year extension of the Excess Business Loss (EBL) provisions.
The EBL only allows farmers and other taxpayers to offset farm or business losses against $250,000 of other income ($500,000 for married couples). Both of these amounts are indexed to inflation.
This means that the largest Net Operatin Loss (NOL) that farmer can carry back two years to offset income in those years is limited to these amounts through 2028. It was originally 2025, then extended one year last year and now two more years.
It appears that the Republicans had planned on using this extension of the EBL to help allow a permanent extension of the Section 199A 20% deduction when they get in power. This ability has now been substantially muted. It is likely at some point that the EBL rules will become permanent and may be strengthened since both parties seem to like the provision.
The IRA has not passed yet but likely will be signed this Friday. We will keep you posted.
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