Pennsylvania PPP Loan Forgiveness and Deductibility of Expenses

Pennsylvania businesses that obtained Payroll Protection Program (PPP) loans under the federal CARES Act received some good news as the Pennsylvania governor signed Senate Bill 109 into law on Friday, February 5, 2021.

Among the bill’s provisions are two items that make it clear that PPP loan forgiveness is not taxable under any of the classes of income subject to tax under the Pennsylvania income tax code.  Further, expenses paid from the proceeds of the loan are fully deductible. This legislative clarification favorably impacts sole proprietors, partnerships, and “S” corporations and aligns the Pennsylvania tax treatment with the federal tax treatment.  

The bill also clarifies that federal individual economic stimulus rebates paid to individuals as part of the COVID-19 economic relief and stimulus packages will not be included in taxable income for Pennsylvania purposes either.

The provisions above were part of an overall bill approving over $900 million in spending geared towards providing relief to help restaurants, schools, and individuals impacted by the COVID-19 pandemic.  The funding source for most of the spending is provided through federal government COVID-19 relief programs.  

Our team of Business and Tax Advisors at Schneider Downs has extensive experience with the issues surrounding PPP loan forgiveness, so please do not hesitate to contact us with any questions.  

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at [email protected].

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2021 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

our thoughts on
Persistent Challenges Facing Manufacturing
OMB Releases 2021 Compliance Supplement
IRS Provides Taxpayer-Friendly Guidance for the Employee Retention Credit
Exit and Succession Planning – The Challenges of What’s Next
COVID-19 Scams Surge with New Variants
LIFO Liquidation Relief for Automotive Dealers
Register to receive our weekly newsletter with our most recent columns and insights.
Have a question? Ask us!

We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible.

Ask us
contact us

This site uses cookies to ensure that we give you the best user experience. Cookies assist in navigation, analyzing traffic and in our marketing efforts as described in our Privacy Policy.

×