As was widely anticipated, the Commonwealth of Massachusetts has now excluded from individual income tax an owner's share of forgiven Paycheck Protection Program (PPP) loans related to a pass through entity. The change comes as a result of the passage of the state’s COVID-19 relief bill, which was signed into law by Governor Charlie Baker on Thursday, April 1st.
Pass through businesses (such as S corporations, LLCs and partnerships) can now exclude any forgiven PPP loans from the taxable income that flows through to its owners. This change now aligns Massachusetts with federal tax laws, in which forgiven PPP loans are excluded from taxable income on federal tax returns.
In addition, the new law excludes up to $10,200 of unemployment income from personal income taxes for Massachusetts residents whose household income is at or below 200% of the federal poverty level.
If you have any questions about your tax liability for forgiven PPP loans or unemployment compensation, please contact Gray, Gray & Gray at (781) 407-0300.