New Hampshire moving to exempt PPP loans from state tax

(The Center Square) – A key legislative committee has approved a plan to exempt thousands of New Hampshire businesses from paying state taxes on federal pandemic relief loans.

A bipartisan proposal, which cleared the House Ways and Means Committee on Tuesday, would eliminate state taxes on the federal Paycheck Protection Program for more than 41,000 businesses that received the disaster loans.

The committee’s unanimous vote to pass the measure tees it up for a vote in the House of Representatives next week. The bill was previously approved by the Senate.

Lawmakers say with the state’s economy rebounding from the pandemic it can afford to give back to businesses that have struggled to survive in the past year. The state has surplus revenues that could be used to offset the impact to tax coffers, they said.

“The state can afford to cover the lost revenue in future years if it is managed properly and I am confident it will be,” Rep. Patrick Abrami, R-Stratham, vice chair of the committee, said Tuesday during a live streamed hearing on the bill. “We are doing our part in helping New Hampshire businesses rebound post pandemic.” The state Department of Revenue Administration estimates the impact to state coffers ranging from about $80 million to $135 million.The Paycheck Protection Program was approved as part of the $2.2 trillion CARES Act passed by Congress in March to help keep small businesses afloat during the current pandemic.Under the law, borrowers are eligible for PPP loan forgiveness if at least 60% of the proceeds go toward payroll expenses.A second pandemic relief package approved by Congress in December provided another round of forgivable PPP loans, and allowed businesses to claim tax deductions for the expenses they covered with forgiven loan proceeds.More than 41,100 New Hampshire businesses received about $3.7 billion through the first round of the loan program, according to U.S. Treasury data.Congress exempted PPP loans from federal income taxes, but New Hampshire is one of 18 states where loans are taxed, according to the Washington, D.C.-based Tax Foundation. Gov. Chris Sununu has pledged to sign the bill when it reaches his desk.

Disclaimer: This content is distributed by The Center Square