Senator Patricia Bates (R-Laguna Niguel) issued the following statement after the California State Senate approved Assembly Bill 80 today that will provide state tax deductibility for 100 percent of allowable business expenses paid using Paycheck Protection Program (PPP) and Emergency Injury Disaster Loan (EIDL) forgivable loans:
“I’m glad the Legislature today has embraced the spirit of Senator Andreas Borgeas’ (R-Fresno) Senate Bill 265 and made COVID-19 relief tax-free for many small businesses. This is a huge improvement over the $150,000 deductibility cap that the Governor and legislative leaders agreed to two months ago that would have harmed many job creators. I joined small businesses in sounding the alarm over the cap proposal and our efforts have made a difference.
“With California supposedly enjoying a budget ‘surplus,’ it makes no sense to penalize small businesses for accepting federal assistance — especially since the feds have made such assistance fully tax deductible. With today’s vote, we will finally end the ridiculous scenario of punishing businesses for accepting federal COVID-19 relief.”
To be eligible for the tax deductibility under AB 80, businesses must have incurred a 25 percent reduction in gross receipts and must not be a publicly traded company. The bill also excludes from taxable income PPP and EIDL forgivable loans provided as a result of the recent Consolidated Appropriations Act of 2021.
Click here to read Senator Bates’ Times of San Diego op-ed on the tax deductibility issue.