This bill proposes to amend the current law regarding the net operating loss deduction (NOLD) under the business profits tax. Specifically, it seeks to remove the taxable income limitation on the NOLD as it is currently aligned with section 172 of the United States Internal Revenue Code. The bill introduces language that would allow a business organization to claim the NOLD without being subject to any taxable income limitation under section 172. Additionally, the bill clarifies that a net operating loss is only to be apportioned in the year it was incurred and can be carried forward for 10 years following the loss year, with certain limitations on the amount that can be carried forward based on the year the loss was generated.

The fiscal impact of the bill is considered indeterminable, but it is expected to decrease state revenue. The Department of Revenue Administration used tax year 2021 data to estimate the potential fiscal impact, which suggests a decrease in revenue for the General Fund and Education Trust Fund. The bill would apply to all taxable periods ending on or after December 31, 2024, and is set to take effect on July 1, 2024. The Department would need to update tax return forms and electronic management systems to reflect the changes, but no additional administrative costs are anticipated that cannot be absorbed within the Department's operating budget. The fiscal note indicates that the bill does not provide funding to cover estimated expenditures and does not authorize new positions for implementation.

Statutes affected:
As Amended by the House: 77-A:4