New Hampshire businesses will be exempt from paying state taxes on federal disaster loans under legislation expected to be signed by Gov. Chris Sununu.
Sununu told the New Hampshire Business Review he planned to sign the recently approved measure, which will eliminate taxes on the federal Paycheck Protection Program for more than 25,000 businesses that received the disaster loans.
“Excited to move forward with yet another tax cut for the Main Street small businesses of New Hampshire,” the Republican governor told the publication. “This plan is a win-win.”
Senate Bill 3, which was filed by Senate Majority Leader Jeb Bradley, R-Wolfeboro, passed the House on Friday putting New Hampshire in line with a majority of other states that have exempted the PPP loans from taxation. The bill was previously approved by the Senate.
Congress exempted the disaster loans from federal income taxes, but New Hampshire was one of 18 states where the funds were scheduled to be taxed.
Lawmakers who backed the move argued that the state has plenty of surplus money and can afford to give back to businesses that have struggled to survive during the 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 25,000 New Hampshire businesses received about $3.72 billion through the loan program, according to the latest data from the U.S. Treasury.
The federal program effectively ended last week, when the Small Business Administration stopped taking applications for funding.
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