As we move deeper into 2025, it’s crucial for business owners — especially those operating pass-through entities like partnerships and S corps — to stay on top of tax rules that could significantly impact their bottom line. One of the most overlooked is the Excess Business Loss (EBL) Limitation, and it’s back with a vengeance.

📉 So, what is it?

Under §461(l), noncorporate taxpayers can only deduct up to $313,000 (or $626,000 for joint filers) in net business losses against non-business income in 2025. Any losses exceeding that threshold? They’re not lost — but they do carry forward as a net operating loss (NOL) into future years.

📌 Why does this matter?

You might think a big loss in one year could fully offset income from wages, investments, or other sources — but the EBL rule prevents that. The goal? Limit taxpayers from aggressively sheltering non-business income with large pass-through losses.

📆 Originally temporary — now here to stay?

Originally introduced by the Tax Cuts and Jobs Act and extended by the American Rescue Plan, this limitation is currently scheduled to run through 2028. Barring future legislation, this rule is now a fixed part of the tax landscape.

✅ Planning tip: If you’re forecasting large losses or planning to sell a business interest in 2025, this limitation could affect your tax picture more than you realize. Work with your advisor early in the year — not just at tax time — to avoid unpleasant surprises.

If you’d like to discuss how the EBL rule might impact your situation or your clients, I’m happy to connect.

#TaxPlanning #SmallBusiness #PassThroughEntities #TaxUpdates #ExcessBusinessLoss #Section461l #TaxProfessionalAs we move deeper into 2025, it’s crucial for business owners — especially those operating pass-through entities like partnerships and S corps — to stay on top of tax rules that could significantly impact their bottom line. One of the most overlooked is the Excess Business Loss (EBL) Limitation, and it’s back with a vengeance.

📉 So, what is it?

Under §461(l), noncorporate taxpayers can only deduct up to $313,000 (or $626,000 for joint filers) in net business losses against non-business income in 2025. Any losses exceeding that threshold? They’re not lost — but they do carry forward as a net operating loss (NOL) into future years.

📌 Why does this matter?

You might think a big loss in one year could fully offset income from wages, investments, or other sources — but the EBL rule prevents that. The goal? Limit taxpayers from aggressively sheltering non-business income with large pass-through losses.

📆 Originally temporary — now here to stay?

Originally introduced by the Tax Cuts and Jobs Act and extended by the American Rescue Plan, this limitation is currently scheduled to run through 2028. Barring future legislation, this rule is now a fixed part of the tax landscape.

✅ Planning tip: If you’re forecasting large losses or planning to sell a business interest in 2025, this limitation could affect your tax picture more than you realize. Work with your advisor early in the year — not just at tax time — to avoid unpleasant surprises.

If you’d like to discuss how the EBL rule might impact your situation or your clients, I’m happy to connect.

#TaxPlanning #SmallBusiness #PassThroughEntities #TaxUpdates #ExcessBusinessLoss #Section461l #TaxProfessionalAs we move deeper into 2025, it’s crucial for business owners — especially those operating pass-through entities like partnerships and S corps — to stay on top of tax rules that could significantly impact their bottom line. One of the most overlooked is the Excess Business Loss (EBL) Limitation, and it’s back with a vengeance.

📉 So, what is it?

Under §461(l), noncorporate taxpayers can only deduct up to $313,000 (or $626,000 for joint filers) in net business losses against non-business income in 2025. Any losses exceeding that threshold? They’re not lost — but they do carry forward as a net operating loss (NOL) into future years.

📌 Why does this matter?

You might think a big loss in one year could fully offset income from wages, investments, or other sources — but the EBL rule prevents that. The goal? Limit taxpayers from aggressively sheltering non-business income with large pass-through losses.

📆 Originally temporary — now here to stay?

Originally introduced by the Tax Cuts and Jobs Act and extended by the American Rescue Plan, this limitation is currently scheduled to run through 2028. Barring future legislation, this rule is now a fixed part of the tax landscape.

✅ Planning tip: If you’re forecasting large losses or planning to sell a business interest in 2025, this limitation could affect your tax picture more than you realize. Work with your advisor early in the year — not just at tax time — to avoid unpleasant surprises.

If you’d like to discuss how the EBL rule might impact your situation or your clients, I’m happy to connect.

#TaxPlanning #SmallBusiness #PassThroughEntities #TaxUpdates #ExcessBusinessLoss #Section461l #TaxProfessionalAs we move deeper into 2025, it’s crucial for business owners — especially those operating pass-through entities like partnerships and S corps — to stay on top of tax rules that could significantly impact their bottom line. One of the most overlooked is the Excess Business Loss (EBL) Limitation, and it’s back with a vengeance.

📉 So, what is it?

Under §461(l), noncorporate taxpayers can only deduct up to $313,000 (or $626,000 for joint filers) in net business losses against non-business income in 2025. Any losses exceeding that threshold? They’re not lost — but they do carry forward as a net operating loss (NOL) into future years.

📌 Why does this matter?

You might think a big loss in one year could fully offset income from wages, investments, or other sources — but the EBL rule prevents that. The goal? Limit taxpayers from aggressively sheltering non-business income with large pass-through losses.

📆 Originally temporary — now here to stay?

Originally introduced by the Tax Cuts and Jobs Act and extended by the American Rescue Plan, this limitation is currently scheduled to run through 2028. Barring future legislation, this rule is now a fixed part of the tax landscape.

✅ Planning tip: If you’re forecasting large losses or planning to sell a business interest in 2025, this limitation could affect your tax picture more than you realize. Work with your advisor early in the year — not just at tax time — to avoid unpleasant surprises.

If you’d like to discuss how the EBL rule might impact your situation or your clients, I’m happy to connect.

#TaxPlanning #SmallBusiness #PassThroughEntities #TaxUpdates #ExcessBusinessLoss #Section461l #TaxProfessional