RI's $13B Budget Exempts Most PPP Loans From Tax

Rhode Island will exempt most Paycheck Protection Program loans from tax and increase the state's conveyance tax hike on high-end real estate as part of a $13 billion budget bill signed by the governor Tuesday.

Democratic Gov. Dan McKee approved H.B. 6122, which partly decouples from the federal tax treatment of PPP loans that were part of the federal coronavirus pandemic relief effort . Under the budget, the state will tax only forgiven loans of more than $250,000. McKee, in his budget proposal, had proposed taxing forgiven loan amounts of more than $150,000. 

State lawmakers have said that under the limit, 93% of the approximately 30,000 Rhode Island businesses that received PPP loans will not pay tax on them.

"Rhode Island's economic recovery is in full swing, and this budget gives us the tools to ensure it continues," McKee said in a statement, adding that the budget represents a collaborative effort between state legislators and his administration.

The bill doubles the state's $2.30 conveyance tax on each $500 of the purchase price of real estate over $800,000. McKee had proposed taxing property tax transfers in his budget proposal but set the threshold at $700,000. 

Additionally, the budget renews the state's expiring historic properties tax credit for one year and increase funding for the film and tax credit by $10 million in 2022.

House Finance Committee Chairman Marvin Abney, D-Newport, said in a statement that the budget will help the state's struggling residents in the aftermath of the coronavirus pandemic.

"Without broad-based tax increases and through the preservation and strengthening of services and programs that help the vulnerable, this budget is a bill that will support most Rhode Islanders attempting to get back to their normal way of life," Abney said.

The budget does not include the governor's proposal to legalize, regulate and tax marijuana, but lawmakers have indicated that they intend to continue working on cannabis legalization legislation.

Representatives of leaders of House and Senate leaders did not immediately respond to requests for comment.

Representatives of McKee did not immediately respond to a request for comment.

--Editing by Neil Cohen.

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