Wisconsin Republicans are drafting legislation that would cut business taxes by $450 million by allowing those that received federal Paycheck Protection Program loans to deduct related purchases on their 2020 state taxes.
The Paycheck Protection Program (PPP), formed under the CARES Act last year, awarded forgivable tax-free loans to businesses facing financial losses during the COVID-19 pandemic. Because that money was not taxed as income, the Internal Revenue Service determined expenditures paid with those funds are not tax deductible under current federal and state laws.
Congress last month passed a law on the federal level overriding the IRSâ decision and allowing businesses to deduct payments made with PPP funds, but Wisconsin has not yet made that change at the state level. Because that legislation has not been passed in the state, the Department of Revenue is following the IRS determination that expenditures paid with PPP cannot be deducted.