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Pennsylvania State Senate
05/06/2024 07:36 AM
Pennsylvania State Senate
https://www.legis.state.pa.us/cfdocs/Legis/CSM/showMemoPublic.cfm?chamber=S&SPick=20210&cosponId=34508
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Senate of Pennsylvania
Session of 2021 - 2022 Regular Session

MEMORANDUM

Posted: January 31, 2021 12:56 PM
From: Senator Lisa M. Boscola
To: All Senate members
Subject: Exempting Paycheck Protection Loan Forgiveness from State Income Tax
 
In the near future, I intend to introduce legislation aimed to once again help small business. My proposed legislation would allow for all loans that are forgiven under the federal Paycheck Protection Program (PPP) to be exempt from state personal income tax.
 
Currently, when PPP loans are forgiven in Pennsylvania, the amount forgiven will constitute as taxable income for Pennsylvania personal income tax purposes. However, under federal law, when PPP loans are forgiven, the loans are not treated as income for federal income tax purposes. The Pennsylvania personal income tax (PA PIT) statute does not incorporate these federal provisions. As a result, there is uncertainty as to whether they are includable in the taxable income of a PA PIT taxpayer.
 
This legislation will alleviate tax uncertainty to align Pennsylvania with the federal rules, and bring additional support to our small businesses. The purpose of PPP loans are to help businesses in the Commonwealth during the COVID-19 pandemic. Businesses should be entitled to use the full benefits received from these programs without having to worry whether or not they will be taxed. Please join me in co-sponsoring this important legislation.