Kimberly Weisul — who refers to herself accurately as a “professional explainer” — recently published this excellent article in Inc. Magazine on the state-by-state treatment of PPP funds.
Nineteen states have effectively taxed this income, either directly or by denying related expenses. And interestingly enough, seven of those states have legislation currently pending to make these funds non-taxable; at this rate, they are unlikely to get approved before tax season is over.
(I may complain plenty about Illinois’ tax laws, but thankfully they have conformed with the federal guidance here.)
The Tax Foundation provides an excellent list of which states tax PPP income and/or deny PPP expense deductions — and goes deeper into the weeds for states that may not have Income Tax but do have a Gross Receipts Tax. Do yourself a favor and check it out before filing your taxes.
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