New Hampshire to Exempt P3 Loans from State Taxes | New Hampshire
(The Center Square) – New Hampshire lawmakers plan to exempt thousands of New Hampshire businesses from paying state taxes on federal pandemic relief loans.
A proposal tabled by Senate Majority Leader Jeb Bradley, R-Wolfeboro, would eliminate state taxes on the federal paycheck protection program for more than 24,000 businesses that have received disaster loans.
The measure cleared the Senate Ways and Means Committee by a unanimous vote Monday and was put to a vote in the Senate next Thursday.
If the Senate approves the bill, it will still have to pass the New Hampshire House of Representatives before going to Governor Chris Sununu’s office for consideration.
At a legislative hearing in February, Bradley called the bill a “clarification” that would bring state tax policy in line with the intent of the federal relief program.
“PPP funds were designed to keep the US economy afloat during the significant uncertainty of the pandemic, this was never meant to be a taxable event,” Bradley told lawmakers. “This means there was never any intention to create a loss of revenue for New Hampshire.”
He took issue with the state’s claims it would lose revenue by not taxing loans, arguing that it is tax revenue the state was never supposed to collect.
The State Department of Tax Administration said it was unable to calculate the proposal’s exact tax impact, citing a lack of information on borrowers, but estimated the impact on borrowers. State coffers ranging from approximately $ 80 million to $ 135 million.
The paycheck protection program was approved as part of the $ 2.2 trillion CARES bill passed by Congress in March 2020 to help keep small businesses afloat during the current pandemic.
By law, borrowers are eligible for the forgiveness of PPP loans if at least 60% of the proceeds are for payroll costs.
A second pandemic relief program approved by Congress in December provided another round of PPP-repayable loans and allowed businesses to claim tax deductions for expenses they covered with the loan proceeds returned.
More than 24,000 New Hampshire companies received about $ 2.6 billion in the first round of the loan program, according to data from the US Treasury.
Congress has exempted PPP loans from federal income tax, but New Hampshire is one of 18 states where loans are taxed, according to the Washington, DC-based Tax Foundation.