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Pennsylvania Statutes Title 72 P.S. Taxation and Fiscal Affairs § 7401.1. Determination of net loss deduction

Current as of January 01, 2026 | Updated by Findlaw Staff

(a) For taxable years beginning after December 31, 2024, and prior to January 1, 2026, the net loss deduction shall be determined as follows:

(1) Deduct forty per cent of taxable income as determined under subclause 1 of section 401(3)   1 or, if applicable, subclause 2 of section 401(3), for a net loss incurred in a taxable year beginning prior to January 1, 2025.

(2) (Reserved).

(b) For taxable years beginning after December 31, 2025, and prior to January 1, 2027, the net loss deduction shall be determined as follows:

(1) Deduct forty per cent of taxable income as determined under subclause 1 of section 401(3) or, if applicable, subclause 2 of section 401(3), for a net loss incurred in a taxable year beginning prior to January 1, 2025.

(2) For a net loss incurred in a taxable year beginning after December 31, 2024, deduct an amount equal to:

(i) fifty per cent minus the actual percentage of taxable income deducted under paragraph (1);  multiplied by

(ii) the taxable income as determined under subclause 1 of section 401(3) or, if applicable, subclause 2 of section 401(3).

(c) For taxable years beginning after December 31, 2026, and prior to January 1, 2028, the net loss deduction shall be determined as follows:

(1) Deduct forty per cent of taxable income as determined under subclause 1 of section 401(3) or, if applicable, subclause 2 of section 401(3), for a net loss incurred in a taxable year beginning prior to January 1, 2025.

(2) For a net loss incurred in a taxable year beginning after December 31, 2024, deduct an amount equal to:

(i) sixty per cent minus the actual percentage of taxable income deducted under paragraph (1);  multiplied by

(ii) the taxable income as determined under subclause 1 of section 401(3) or, if applicable, subclause 2 of section 401(3).

(d) For taxable years beginning after December 31, 2027, and prior to January 1, 2029, the net loss deduction shall be determined as follows:

(1) Deduct forty per cent of taxable income as determined under subclause 1 of section 401(3) or, if applicable, subclause 2 of section 401(3), for a net loss incurred in a taxable year beginning prior to January 1, 2025.

(2) For a net loss incurred in a taxable year beginning after December 31, 2024, deduct an amount equal to:

(i) seventy per cent minus the actual percentage of taxable income deducted under paragraph (1);  multiplied by

(ii) the taxable income as determined under subclause 1 of section 401(3) or, if applicable, subclause 2 of section 401(3).

(e) For taxable years beginning after December 31, 2028, the net loss deduction shall be determined as follows:

(1) Deduct forty per cent of taxable income as determined under subclause 1 of section 401(3) or, if applicable, subclause 2 of section 401(3), for a net loss incurred in a taxable year beginning prior to January 1, 2025.

(2) For a net loss incurred in a taxable year beginning after December 31, 2024, deduct an amount equal to:

(i) eighty per cent minus the actual percentage of taxable income deducted under paragraph (1);  multiplied by

(ii) the taxable income as determined under subclause 1 of section 401(3) or, if applicable, subclause 2 of section 401(3).

1  72 P.S. § 7401.
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Cite this article: FindLaw.com - Pennsylvania Statutes Title 72 P.S. Taxation and Fiscal Affairs § 7401.1. Determination of net loss deduction - last updated January 01, 2026 | https://codes.findlaw.com/pa/title-72-ps-taxation-and-fiscal-affairs/pa-st-sect-72-7401-1/

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