ST. PAUL – With a $1.6 billion surplus now projected for Minnesota, State Representative Rod Hamilton (R-Mountain Lake) said struggling Main Street business owners should be protected from unnecessary taxation on a forgivable federal government loan.
“When Governor Walz forced many small businesses to shut down due to the COVID-19 pandemic, these store owners accepted the loan in hopes of preventing permanent closure,” Hamilton said. “Many of them are still hurting, and without legislative action, many of them will have to send thousands of dollars to the tax man as financial punishment for trying to survive.”
Hamilton said impacted business owners who accepted Payroll Protection Program (PPP) loans are being unnecessarily targeted by state government. If businesses used those funds to pay wages, rent, or other criteria approved by the federal government, the loans were ultimately forgiven and were free from federal taxation.
But Minnesota has not conformed its tax code to match the federal law, and in doing so, would be the only state in the Upper Midwest that has yet to exempt forgiven PPP loan income from state income taxes.
“With this surplus, we can act on behalf of our suffering business owners and still have plenty of revenue left over,” Hamilton said. “We need to act on this problem, and act now.”
Legislation that would exempt forgiven PPP loan income from state taxes currently awaits action in the Minnesota House Taxes Committee.