The purpose of the "excess business loss" rules are to limit the amount of non-business income

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The excess business loss rules are designed to limit the amount of non-business income that can be offset by business losses. This helps prevent taxpayers from using losses from one business or activity to reduce their tax liability on other types of income, such as wages, investments, or rental income. The rules were introduced as part of the Tax Cuts and Jobs Act of 2017 and generally apply to tax years beginning after December 31, 2017, and before January 1, 2026.

The Purpose of the "Excess Business Loss" Rules Are to Limit