Nol Carryforward Rules For 2025 Tax Year. Ordinarily, you must carry an nol back to the earliest year within the carryback period in which there is taxable income, then to the next earliest year, and so on. Suppose a company lost $5 million in 2023 and earned $6.
To smooth the tax burden, the loss carryforward provision allows the nol in the second year to offset taxes due in the third year. For tax year 1, business a has $100,000 of gross income and $125,000 of tax deductions.