PPP – questions with respect to the state tax treatment remain in some cases

Many states still seem to grapple with the latest federal changes to the treatment of the PPP loans and business expenses paid for with the PPP loan that is later forgiven. There is a huge need at the state level to balance the problems of state deficits with the economic hardship on individuals and businesses due to the pandemic. Only a few days ago Maine passed a supplemental budget in favour of the taxpayers conforming to the federal treatment after a long speculation that the benefit would only be available for the first $1 million of PPP received as proposed by Governor Mills. In Massachusetts the treatment currently differs between incorporated businesses and those operating as LLCs, partnerships and sole proprietors with the double benefit available only to the earlier group. Massachusetts lawmakers are moving to remove this discrepancy, but the outcome is still to be seen.

Here’s one of the best links for a quick overview that is regularly updated https://taxfoundation.org/state-tax-forgiven-ppp-loans/

However, for more granular rules and recent legislation, it is best to confirm with each state.