S.B. 109, signed by Democratic Gov. Tom Wolf on Friday, conforms the state's personal income tax code to the federal treatment of forgiven PPP loans and specifies that individual stimulus checks issued under the Coronavirus Aid, Relief and Economic Security Act
and the Consolidated Appropriations Act are not taxable.Pennsylvania already conforms its corporate net income tax base to the federal tax code for PPP loans, but the bill clarifies that the forgiven loans will also not be subject to the state's personal income tax, according to a fiscal note on the bill. Without the clarification, small businesses could have seen a tax increase of $100 million, according to the note.
The fiscal note also said that while the bill specifies that stimulus payments are excluded from tax, the state Department of Revenue previously said the payments are considered nontaxable rebates and aren't subject to personal income tax.
Sen. Joe Pittman, R-Indiana, introduced the legislation on Jan. 23 as a supplemental appropriations bill. Lawmakers added the tax exclusions to the bill as it worked its way through the General Assembly, which passed the measure unanimously.
--Editing by Vincent Sherry.
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