NEW JERSEY – The Senate Budget and Appropriations Committee has approved legislation sponsored by Senator Anthony Bucco to ensure that PPP loans that are forgiven by the Federal Government are exempt from New Jersey’s gross income tax.
“As we all know, the COVID-19 pandemic has severely impacted small businesses in New Jersey. I can name dozens of family restaurants, small retail stores, and other establishments that have either closed their doors forever or are struggling everyday to stay open,” Bucco (R-25) said. “During this incredibly difficult time, small business owners should not have to worry about additional taxes. My legislation will eliminate the State tax and keep the State from profiting off the backs of businesses that continue to struggle during the pandemic.”
The paycheck protection program (PPP) was established under the CARES Act, a federal law enacted in response to the economic impact of COVID-19. The PPP offers loans to small businesses in order to help them keep employees on their payroll during the pandemic. Some or all of the loan may be forgiven by the Federal Government if certain conditions are met, Bucco said.
Bucco’s legislation, S-3234, ensures that forgiven PPP loans are not unduly taxed—by excluding those forgiven loans from the State’s gross income tax. The bill also allows the deduction of expenses paid for by a PPP loan as well.
“New Jersey is one of the highest taxed states in the nation,” Bucco said. “During this pandemic, when the small business community is struggling to survive, the last thing it needs is yet another tax.”