Do States Conform to the CARES Act NOL Carryback Periods?

Most states with a corporate income tax do not conform to the net operating loss (NOL) carryback periods added by the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

The CARES Act reinstated a carryback period under IRC Sec. 172 for NOLs from tax years 2018, 2019, and 2020. The carryback period is 5 years. Taxpayers can no longer carryback federal NOLs from tax years beginning after 2020.

Many states do not allow any NOL carryback deduction by corporate income taxpayers. Some states provide a shorter NOL carryback period. Other states have an IRC conformity tie-in date that does not adopt the CARES Act NOL carryback periods.

Which States Do Not Conform to the CARES Act NOL Carryback Periods?

31 states and the District of Columbia do not allow any NOL carryback deduction.

Alabama Arkansas Arizona
California Colorado Connecticut
District of Columbia Florida Georgia
Hawaii Illinois Indiana
Iowa Kentucky Louisiana
Massachusetts Michigan Minnesota
Nebraska New Hampshire New Jersey
New Mexico North Carolina North Dakota
Oregon Pennsylvania Rhode Island
South Carolina Tennessee Utah
Vermont Wisconsin  

6 states specify a shorter NOL carryback period.

Idaho (2 yrs.) Kansas (3 yrs.) Mississippi (2 yrs.)
Missouri (2 yrs.) Montana (3 yrs.) New York (3 yrs.)

3 states have an IRC conformity tie-in date that does not adopt the CARES Act carryback periods.

Maine Virginia West Virginia

Which States Conform to the CARES Act NOL Carryback Periods?

3 states conform to IRC Sec 172 carryback periods.

Alaska Delaware Oklahoma

Delaware limits the amount of the state NOL carryback deduction to $30,000.

Maryland recognizes the federal NOL as the state NOL deduction for computing taxable income. It has a unique IRC conformity tie-in provision that allows decoupling if it determines the revenue impact from federal changes is more than $5 million. It will follow the CARES Act NOL carryback periods for the 2018 and 2019 tax years. But it will not allow NOL carrybacks for the 2020 tax year.

By Timothy Bjur, J.D.

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All stories by: CCHTaxGroup