One of the biggest decisions the General Assembly will make this year is whether the state of Virginia will align its tax code with the federal government’s policy of not imposing taxes on Paycheck Protection Program loan funds that were forgiven.
Unless the General Assembly acts soon, under current state law, a forgiven PPP loan will be considered taxable income and a business will not be able to deduct PPP forgiven expenses on one’s state income taxes.
SB 1146 which would have the state conform with the federal code passed committee and is now being considered on the Senate floor today (Thursday, February 4th). While the bill allows a business to exclude the forgiven loan amount from their income – it only allows for a maximum deduction of $50,000 to cover one’s business expenses related to their PPP loan.
Unfortunately, Governor Northam and the House Finance committee would prefer no deduction at all. While we appreciate the Senate’s efforts to provide some deductibility, NFIB is working hard to raise the deduction cap to at least $100,000.
We will keep you posted on the status of this important legislation. Here’s the Call to Action alert if you would like to voice your opinion. Click Here.