Unemployment Relief and a Tax Benefit for PPP Loans Forgiven

An Act Financing a Program for Improvements to the Unemployment Insurance Trust Fund and Providing Relief to Employers and Workers in the Commonwealth (the Act) was signed into law on April 1, 2021 by Governor Baker.

Here are some of the key elements that we have been waiting for.

The Act now treats PPP loan forgiveness for personal income taxpayers as nontaxable which conforms to the federal treatment. The personal income taxpayers include Schedule C sole proprietors and single member LLC’s, individual partners in a partnership and S corporation shareholders. 

Business expenses paid with PPP loan proceeds remain deductible on Massachusetts returns, consistent with federal treatment.

The Act also treats Economic Injury Disaster Loan (EIDL) grants as nontaxable. Business expenses paid with EIDL grant proceeds are deductible.

The Act also allows taxpayers to deduct up to $10,200 of unemployment benefits if their household income is not more than 200% of the federal poverty level. This threshold is different than the federal threshold.

Your team at Stone will continue to monitor any developments as they occur. Please contact us for more information on these important changes.

Stone & Company is a CPA firm based in Lexington, Massachusetts

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