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HB 642

Remove limit on certain tax net operating loss carry-forwards

136th Legislature (2025-2026) Introduced by Steve Demetriou

Ohio bill eliminates limits on business tax loss carry-forwards, reducing future tax liability for unprofitable companies but decreasing state revenue.

Referred to committee
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Bill Summary · HB 642

Legislative bill overview

HB 642 would eliminate or significantly expand the current limit on how long businesses can carry forward tax net operating losses (NOLs) to offset future taxable income. Currently, Ohio law restricts how far back or forward companies can use accumulated losses from unprofitable years to reduce their tax liability in profitable years.

Why is this important

This change directly affects business tax obligations and state tax revenue. Allowing unlimited NOL carry-forwards reduces the taxes owed by companies that experience multi-year losses, which can meaningfully decrease state revenue but may also help businesses survive downturns or recover from major setbacks more quickly.

Potential points of contention

  • State revenue impact: Removing carry-forward limits will reduce tax collections during recovery periods, potentially shifting the tax burden to other taxpayers or requiring spending cuts
  • Which businesses benefit: Large, established companies with accounting resources to track NOLs may benefit disproportionately compared to small businesses, raising fairness questions
  • Tax avoidance concerns: Unlimited NOL provisions could enable tax planning strategies where profitable companies are acquired primarily for their accumulated losses, artificially reducing tax liability

Compiled from official sources — confirm details with the bill’s official record.

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