5674: Net Operating Loss Deduction (2025)
Michigan · Michigan Treasury · Used for tax years 2025
Michigan Form 5674 calculates your 2025 Michigan net operating loss (NOL) deduction from available Group 1 and Group 2 losses. It reports the amount to enter on Michigan Schedule 1 and is included with Schedule 1 and Form MI-1040.
Who files this form
You must complete Form 5674 if you claim a net operating loss (NOL) deduction on Michigan Schedule 1 for 2025. The form calculates your deduction from available Group 1 and/or Group 2 NOLs.
Include both Form 5674 and Schedule 1 with your MI-1040. All NOL deductions must be supported by Schedule MI-1045 for the loss year.
What you'll need
- Your 2025 MI-1040 and Schedule 1. Form 5674 uses amounts from MI-1040, line 10, and Schedule 1, lines 9 and 29.
- Schedule MI-1045 and supporting documentation for each loss year, if not already provided to the Michigan Department of Treasury.
- A schedule showing how your Michigan NOL was absorbed, or used. The instructions point to an NOL carryforward worksheet on Treasury’s website for help.
- If you check line 1 because your filing or marital status changed, calculations showing how you redetermined your Michigan NOL and/or Michigan income subject to tax.
- If you must recompute your share of income subject to tax, a separate statement identifying your items of income or loss included in adjusted gross income, with the type and location of each item.
How to file
Type or print in blue or black ink. Include Form 5674 with your MI-1040 and Schedule 1, along with the required supporting documents.
Report the amount from Form 5674, line 11 or line 12, as applicable, on Schedule 1, line 30.
The supplied text does not give a mailing address or e-filing instructions.
Common mistakes
- Leaving out supporting documents. The instructions remind filers to include required documentation to help reduce processing delays.
- Missing a filing or marital status change. Check line 1 if either changed in any year since the NOL was created. Your allowed deduction may be affected.
- Using the wrong signs. Enter Group 1 and Group 2 NOL totals as positive numbers on lines 2 and 3. Enter Schedule 1 subtractions as a negative number on line 6.
- Completing line 12 after line 11. Line 11 specifically says not to complete line 12.
- Skipping carryforward years. Report the NOL carryforward in consecutive years, including years without Michigan taxable income before exemptions.
- Including a current-year loss in the line 1 recomputation. The instructions say not to include a loss created in the current year.
Questions people ask
What is the difference between Group 1 and Group 2 NOLs?
Group 1 NOLs were created in 2017 or earlier and may be carried forward for 20 consecutive years following the loss year. Group 2 NOLs were created in 2018 or later and may be carried forward indefinitely. Group 2 also includes any applicable Michigan excess business loss from the previous year.
How does Form 5674 limit the Group 2 deduction?
Line 8 calculates 80% of the income on line 7. Line 9 takes the lesser of that amount or the Group 2 NOL total on line 3. The final deduction on line 11 is the lesser of line 7 or the combined amount on line 10.
What if my income before the Michigan NOL deduction is zero or less?
The instructions say there is no income to offset. Line 12 combines Group 1 and Group 2 NOLs to report the carryforward. After required modifications, unused NOLs remain combined within their respective groups.
How long should I keep my NOL records?
Keep all records supporting an NOL for six years after the NOL expired or was absorbed.