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Gov. Newsom and legislative leaders announced Feb. 17 that they have reached an agreement on a legislative package to provide relief to businesses and individuals facing economic hardship from the COVID-19 recession.
The package includes an agreement to partially conform California’s tax law to the new federal tax treatment for loans provided through the Paycheck Protection Plan (PPP). More than 750,000 PPP loans were taken out by California small businesses. The agreement allows companies to deduct up to $150,000 in expenses covered by the PPP loan. All businesses that took out loans of $150,000 or less would be able to maximize their deduction for state purposes. Larger firms that took out higher loans would still be subject to the same ceiling of $150,000 in deductibility.
This tax treatment would also extend to the Economic Injury Disaster Loans.
As of Feb. 18, bill language for the business items of the package has been released:
CalCPA will continue to work with policy leaders on this issue and keep CalCPA members up to date on any development.
Please continue to monitor CalCPA communications for updates.
Updated Feb. 18, 2021