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Daily Tax Report: State

PPP Expense Deductions to Cost States Billions in Revenue

Jan. 12, 2021, 9:45 AM

States already reeling from painful coronavirus revenue losses stand to lose tens of billions more as a tax break tucked into the most recent pandemic relief law rolls through state tax returns.

Roughly two dozen states that automatically conform to federal tax law changes, including Connecticut, Illinois and New York, are most prone to the revenue hit.

A small but potentially costly provision in the 5,593-page law permits businesses to deduct expenses funded by forgiven loans provided under the federal Paycheck Protection Program. One estimate suggests the provision could result in $203 billion in tax losses to the federal government...

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