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February 17, 2021

Confused by the debate on PPP loans and “conformity”? Here’s how it works…

Under the federal Consolidated Appropriations Act that was signed into law in late December, the federal government is providing additional federal tax deductions on top of the existing tax exemption related to tax-exempt Paycheck Protection Program (PPP) loan forgiveness. This creates a double tax benefit.

Fully allowing the tax benefit at the state level would provide a large “double-dipping” tax break for many big businesses in the name of helping small businesses.

Here’s how fully conforming to the federal law could play out for Virginia businesses:

Infographic illustrating how conforming to the new federal rules for deductions and the tax-exempt Paycheck Protection Program loans.

Chris Wodicka

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