This is a follow-up to our email on February 3, 2021, regarding Pennsylvania’s treatment of forgiven Paycheck Protection Program (PPP) loans for personal income tax.
On Friday, February 5, 2021, the Pennsylvania House and Senate unanimously passed Senate Bill 109 and Governor Wolf signed the Bill into law. Senate Bill 109 provides for the nontaxability for Pennsylvania personal income tax purposes of loans forgiven under the federal Paycheck Protection Program. As previously mentioned, passthrough entities, such as partnerships and S-corporations, follow personal income tax rules and now will not include forgiven PPP loans as taxable income.
In addition, Senate Bill 109 establishes the Hospitality Industry Recovery Program, the Rental and Utility Assistance Grant Program, and other measures to provide immediate assistance to citizens of Pennsylvania who have suffered economic loss due to the COVID-19 pandemic.