Sponsors (10)
The bill helps banks manage and time loss recovery to improve liquidity and tax stability, but it reduces near-term federal revenue, creates fairness concerns favoring banks over other businesses, and forces potentially premature, irrevocable tax-election choices.
Banks and bank-affiliated institutions can recover losses sooner or over an extended period, improving their liquidity and capital planning capacity.
Banks can spread net operating loss utilization across a 20-year period, stabilizing future taxable income and reducing volatility in tax liability for those institutions.
Banks and bank-affiliated entities can choose the timing of tax relief (options on carrybacks), giving affected institutions greater tax-planning flexibility.
Taxpayers (and the federal budget) may face reduced near-term federal revenue if banks carry back losses and claim refunds, increasing budgetary costs or deficits.
Nonbank corporations and small businesses may be disadvantaged because the special NOL rules favor banks, creating fairness concerns between financial institutions and other firms.
Affected institutions must make irrevocable elections by the original return due date, which can force choices before full-year results are known and risk suboptimal tax outcomes for those institutions.
Based on analysis of 2 sections of legislative text.
Permits specified banks and bank-affiliated entities to elect alternative NOL carryback and 20-year carryover rules for losses arising after Dec 31, 2026.
Official title: To amend the Internal Revenue Code of 1986 to provide special rules with respect to the net operating losses of certain financial institutions.
Introduced June 22, 2026 by Mike Carey · Last progress June 22, 2026
Allows certain banks and bank-affiliated entities to elect improved net operating loss (NOL) treatment for losses arising in taxable years beginning after December 31, 2026. The election changes available carryback and carryover periods for qualifying institutions for specified years between 2027 and later years. For 2027 losses the election provides a 20-year carryover with no carryback; for 2028 losses it provides a 1-year carryback plus a 20-year carryover; and for 2029 and later losses it provides a 2-year carryback plus a 20-year carryover. Elections must be made to the IRS by the tax return due date and are irrevocable for that loss year.