NY State Senate Bill 2025-S7877

Senate Bill S7877

2025-2026 Legislative Session

Relates to application of net operating losses in the calculation of corporate franchise taxes

download bill text pdf

Current Bill Status - In Senate Committee Budget And Revenue Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
May 13, 2025	referred to budget and revenue

2025-S7877 (ACTIVE) - Details

Current Committee:: Senate Budget And Revenue
Law Section:: Tax Law
Laws Affected:: Amd §210, Tax L

2025-S7877 (ACTIVE) - Summary

Restricts the carrying back of net operating losses to one year, and carrying forward to five years.

2025-S7877 (ACTIVE) - Sponsor Memo

                                 
BILL NUMBER: S7877

SPONSOR: GOUNARDES
 
TITLE OF BILL:

An act to amend the tax law, in relation to the application of net oper-
ating losses in the calculation of corporate franchise taxes

 
PURPOSE OR GENERAL IDEA OF BILL:

This bill would amend the tax law to reduce the net operating loss
carryback provision from three years to one year and the carryforward
amount from twenty years to five years

 
SUMMARY OF PROVISIONS:

Section one of the bill amends Clause 4 of subparagraph (ix) of para-
graph (a) of subdivision 1 of section 210 of the tax law to effectuate
changes to Net Operating Loss carryback and carryforward provisions

Section two of the bill provides for the effective date

 
JUSTIFICATION:

A net operating loss (NOL) occurs when a company's allowable deductions
exceed its taxable income within a tax period. If a company is taxed
during profitable periods without receiving any tax relief, such as a
refund, during periods of NOL, it results in an unbalanced tax burden.

NOLs can generally be used to offset a company's tax payments through an
IRS tax provision called a loss carryforward or carryback. The NOL
amount is the amount of loss in a current year that can be carried
forward to future years or, in certain instances, carried back to prior
years. Because the time value of money shows that present tax savings
are more valuable than those in the future, businesses almost always
prefer to use the carryback method first, followed by the carryforward
method.

Despite its elimination in 2017 at the federal level, New York State
offers an unlimited, three-year NOL carryback for corporate franchise
tax returns that businesses pay.

This bill makes a sensible adjustment to the Net Operating loss
provisions in the New York State Tax Code, by reducing the net operating
loss carryback provision from three years to one year and the carryfor-
ward amount from twenty years to five years.

 
PRIOR LEGISLATIVE HISTORY:

None

 
FISCAL IMPLICATIONS:

TBD

 
EFFECTIVE DATE:
This act shall take effect immediately

2025-S7877 (ACTIVE) - Bill Text download pdf

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   7877
 
                        2025-2026 Regular Sessions
 
                             I N  S E N A T E
 
                               May 13, 2025
                                ___________
 
 Introduced by Sen. GOUNARDES -- read twice and ordered printed, and when
   printed to be committed to the Committee on Budget and Revenue
 
 AN ACT to amend the tax law, in relation to the application of net oper-
   ating losses in the calculation of corporate franchise taxes
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Clause 4 of subparagraph (ix) of paragraph (a) of  subdivi-
 sion 1 of section 210 of the tax law, as amended by section 16 of part T
 of chapter 59 of the laws of 2015, is amended to read as follows:
   (4)  A  net  operating  loss  may  be carried back [three] ONE taxable
 [years] YEAR preceding the taxable year of the loss ("the  loss  year").
 However  no  loss can be carried back to a taxable year beginning before
 January first, two thousand [fifteen] TWENTY-FOUR.  [The loss  is  first
 carried to the earliest of the three taxable years. If it is not entire-
 ly used in that year, it is carried to the second taxable year preceding
 the  loss  year, and any remaining amount is carried to the taxable year
 immediately preceding the loss year.] Any unused  amount  of  loss  then
 remaining  may  be  carried forward for as many as [twenty] FIVE taxable
 years following the loss year.    Losses  carried  forward  are  carried
 forward  first  to the taxable year immediately following the loss year,
 then to the second taxable year following the loss year, and then to the
 next immediately subsequent taxable year or years until the loss is used
 up or the [twentieth] FIFTH taxable year following the loss year, which-
 ever comes first.
   § 2. This act shall take effect immediately and shall apply to taxable
 years beginning on and after January 1, 2025.
 
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD11013-01-5

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