Payroll Protection Program – May be Taxable at the Vermont State Level

Latest Update 5.7.21

Senate Finance has included this important tax exemption in a miscellaneous tax bill which will go to the House Ways and Means Committee for further consideration.

Latest Update 4.30.21
The PPP taxability discussion continues. House Ways and Means is considering the 2021 taxing of PPP grants. If the legislature fails to authorize a state linkup to recent federal tax changes, these grants will be taxed. In addition, lower-income Vermonters will lose enhanced benefits provided under the Earned Income Tax Credit and the Child and Dependent Care Credit. No decisions have been made at this time.

Latest Update 4.16.21

The legislature passed H.315 last week, which included language to exempt 2020 PPP grants from state income taxes, but it has not exempted 2021 grants from taxation. The business community has risen in objection to the state taxing 2021 grants. Senate Finance has agreed to revisit this issue and will hear from CPAs and the Vermont Bankers Association about the inequity this decision has created.

ORIGINAL POST 4.9.21

Businesses will not have to pay federal income taxes on 2020 and 2021 Payroll Protection Program grants, and they will be exempt from 2020 Vermont income taxes under a bill, H.315,   that is awaiting signature by Gov. Scott. Businesses still need the legislature to exempt income taxes on 2021 grants. If your loan has yet to be converted to a grant you will have to pay income tax on the funds.  Advocates are working to get that support before the legislature adjourns in May.

PPP grants were issued to help businesses keep their employees during the pandemic. Vermont Tax Commissioner Craig Bolio has been testifying before House and Senate committees to garner support for legislation that would align the state with the federal government so that businesses wouldn’t be responsible for paying state income taxes on these grants.

The Lake Champlain Chamber will be hosting a webinar on this issue on Wednesday, April 14, 2021 from 8:30-9:30.