Virginia’s two legislative bodies have not yet agreed on an amount that Virginia businesses can deduct from federal Paycheck Protection Program loans they received last year, and how much of the loans they’ll have to pay state taxes on. Business groups are asking state lawmakers to allow higher deductions — especially for sectors like hospitality and restaurants that are still suffering from the COVID-19 pandemic’s economic impacts.
In two bills currently going through the General Assembly, the Senate has approved a $100,000 deduction, while the House of Delegates has agreed to only a $25,000 deduction — requiring businesses that received PPP loans to pay state taxes on all funding above those amounts. The maximum loan amount allowed under the program was $10 million; approximately 114,000 small businesses in Virginia received a total of $12.6 billion in PPP loans last year (including Virginia Business Media LLC). In January, the U.S. Small Business Administration opened a second round of PPP loans capped at $2 million each.
In December 2020, Congress stipulated that all PPP funds would be exempt from federal corporate taxes and also allowed businesses to deduct expenses paid with PPP funds.
