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When can an Illinois Net Loss Deduction (NLD) be used?
NLD can be used to reduce the base income allocable to Illinois only if the loss year return and all other returns that are impacted by the loss year carryback and carryforward provisions have been filed and to the extent the loss was not used to offset income from any other tax year. Illinois net losses are used in order of expiration beginning with the first year with taxable income after the loss year. You must file the return that generates the loss prior to claiming the loss. The return that generates the loss can be filed at any time for purposes of establishing the loss, but no credit or refund* will be issued on a return that is filed three (3) or more years past the extended due date. If you file your loss return three (3) years or more past the extended due date of the return, you will be entitled to claim the loss for NLD purposes, but you will not be entitled to a refund* or credit of any overpayment calculated on the loss return.
For tax years ending on or after December 31, 2021, Illinois net losses cannot be carried back and can only be carried forward for 20 tax years.
For tax years ending on or after December 31, 2003, and before December 31, 2021, Illinois net losses cannot be carried back, and can only be carried forward for 12 years. However, the carryover period of any net loss that has not expired as of November 16, 2021, shall be extended from 12 years to 20 years.
The use of Illinois net losses to offset income for tax years ending on or after December 31, 2024, and before December 31, 2027, is limited to a maximum deduction of $500,000 per year for Corporations other than S corporations. This limitation does not apply to S corporations, partnerships, estates, or fiduciaries.
The use of Illinois net losses to offset income for tax years ending on or after December 31, 2021, and before December 31, 2024, and tax years ending on or after December 31, 2012, and before December 31, 2014, is limited to a maximum deduction of $100,000 per year for Corporations other than S corporations. This limitation does not apply to S corporations, partnerships, estates, or fiduciaries.
For tax years ending on or after January 1, 2011, and before December 31, 2012, the use of Illinois net losses to offset income is suspended for corporations (other than S corporations).
* A refund may be issued on returns filed more than 3 years past the extended due date if the payment that causes the overpayment was paid within one year of the refund request.
For more information, see the instructions for your specific return type on our Business Income Tax Forms web page.