New Jersey Committee Advances Legislation To Exempt Canceled PPP Loans From State Gross Income Tax | New Jersey
(The Center Square) – The New Jersey State Senate Budget and Appropriations Committee voted 12-0 in favor of a bill to exempt loans from the Paycheck Protection Program (PPP ) which are waived by the federal government of New Jersey gross income tax.
Under Bill S-3234, businesses could also deduct expenses paid by such a loan.
While federal law “generally treats canceled loans as taxable income,” according to the Office of Legislative Services, the CARES Act exempted canceled PPP loans from federal income tax. Additionally, according to a bill statement, the IRS issued a “denying tax deductions for expenses paid” notice with a canceled PPP loan.
“As we all know, the COVID-19 pandemic has severely affected small businesses in New Jersey,” Senator Anthony Bucco, R-Boonton, said in a press release. “I can name dozens of family restaurants, small retail stores, and other establishments that have closed their doors forever or are struggling (every day) to stay open.
“During this incredibly difficult time, small business owners shouldn’t have to worry about additional taxes,” added Bucco. This “legislation will eliminate state taxes and prevent the state from profiting from the backs of businesses that continue to struggle during the pandemic.”
Congress created the Small Business Loans to keep employees on payroll during the pandemic under the CARES (Coronavirus Aid, Relief, and Economic Security) law. The federal government can cancel part or all of the loan if the recipient meets certain conditions.
“Our small businesses have been bludgeoned over the past year, many of our favorite family owned establishments have already closed and many more are at risk of closing,” said Sen. Troy Singleton, D-Burlington, Chairman of the Senate Community and urban. business committee, said in a statement.
“For many, the federal P3 loans were a boon that helped them stay open,” Singleton added. “New Jersey should follow the lead of the federal government and allow businesses to deduct canceled loans from state taxes. This would bring further relief to Garden State businesses. “
The Small Business Administration (SBA) has approved approximately $ 17.3 billion in P3 loans for New Jersey small businesses. The Legislative Services Office could not determine how much revenue the state could lose if the proposed legislation becomes law.
“New Jersey is one of the highest-taxed states in the country,” Bucco said. “During this pandemic, when the small business community is struggling to survive, the last thing it needs is another tax. “