A net operating loss (NOL) occurs when a company’s allowable deductions exceed its taxable income within a tax period. The NOL can generally be used to offset a company’s tax payments in other tax periods through an Internal Revenue Service (IRS) tax provision called a loss carryforward. NOL tax laws have undergone significant changes in recent years. Net operating losses in 2021 or later may not be carried back, and NOL carryforwards are limited to 80% of the taxable income in any one tax period.