Net operating loss provisions are a critical component of a business tax code to ensure that income taxes are levied upon the appropriate tax base. The Net Operating Loss Reform Act creates sound state tax policy and provides businesses with economic relief through expanded liquidity by adopting the federal government’s treatment of business net operating losses that took place in 2018, 2019 and 2020. Furthermore, it recognizes the importance of permanence in sound tax policy and provides states with better treatment of net operating losses going forward for tax years after 2020. It is critical to provide generous net operating loss provisions in response to the Covid-19 pandemic and the associated economic contraction. Many businesses will experience unusually high operating losses in 2020. A competitive, equitable, pro-growth tax code should allow businesses to claim the deductions associated with their net operating losses as soon as possible. This will allow businesses to quickly recognize their losses and retain critical liquidity during an economic downturn. The federal Coronavirus Aid, Relief and Economic Security (CARES) Act changed the treatment of net operating losses in ways that states should adopt. Prior to the CARES Act, federal law allowed net operating loss carry-forwards for unlimited years but capped the deduction at 80% of taxable income in any individual year. Furthermore, federal law did not provide for net operating loss carrybacks. The CARES Act suspended the 80% income limitation against which net operating loss carry-forwards can be taken and provided five years of net operating loss carrybacks for losses earned in 2018, 2019 and 2020. States that have rolling conformity with the Internal Revenue Code should retain conformity with these amendments to the Internal Revenue Code which are contained in Sections 2303 and 2304 of the Coronavirus Aid, Relief and Economic Security (CARES) Act. States that do not have rolling conformity with the Internal Revenue Code should adopt or conform with these provisions. Furthermore, all states should make permanent a more comprehensive set of net operating loss provisions by allowing businesses to carry forward losses for at least 20 years with no income limitation cap and by providing at least two years of net operating loss carrybacks. These changes should be made effective for taxable years beginning after December 31, 2020.