Net Operating Loss (NOL)

A net operating loss happens when your deductions are greater than your income. An NOL must generally be caused by your:

• Trade or business
• Casualty and theft losses from a federally declared disaster
• Rental Property

Certain employees may have an NOL caused by employee expenses. Military members moving due to a permanent change of station may have an NOL caused by moving expenses.

To calculate your NOL see the instructions for Form 172 . Generally, if you have a 2025 NOL you must carry forward that loss. If you do need to carryforward your NOL, you'll want to keep your NOL amount in your records for your 2026 tax return.