To identify the key elements to line losses, make the loss reduction planning and establish the goal of loss reduction scientifically, a family of loss limitation indexes is established including loss limitation, conductor size loss limitation rate and loss reduction rate, VAR loss limitation rate and loss reduction rate, transformer improvement loss limitation rate and loss reduction rate, load balancing loss limitation rate and loss reduction rate, optimal operation loss limitation rate and loss reduction rate and total loss limitation rate and loss reduction rate. A loss reduction optimal planning method is put forward, which is based on the proposed loss limitation indexes and loss reduction indexes. Some examples are given showing that the suggested indexes can identify the extent of the influence of an individual element on line losses and the potential of loss reduction. It is also shown that the proposed planning method can obtain the satisfied loss reduction scheme.