The Minnesota Senate on Thursday approved a bipartisan bill to provide substantial tax relief to Minnesota businesses and individuals for federal assistance they received during the Covid-19 pandemic.
“Small business owners and their workers have been struggling to survive throughout the pandemic thanks to Gov. Walz’s arbitrary restrictions on businesses,” said Sen. Julie Rosen (R-Fairmont). “They relied on emergency PPP loans and accepted extra unemployment from the federal government to get by, but now they are facing big tax bills from those funds. We need to protect our small businesses and I’m glad we were able to do so with this bill.”
The bill contains two main components:
• The bill protects businesses by exempting federal Paycheck Protection Program (PPP) Loans from state taxes. These emergency loans, issued by the federal government last year to help businesses struggling to survive the Covid-19 pandemic, are not subject to federal taxes; the Senate bill would conform Minnesota tax laws to federal rules.
• The bill also allows Minnesotans who collected additional Covid unemployment benefits from the federal government to subtract a portion of those benefits on their income taxes this year. In addition to regular unemployment benefits, many laid-off workers received bonus unemployment payments of $600-per-week or $300-per-week through the federal CARES Act. Minnesota withheld taxes from the regular unemployment payments, but not from the bonus payments. Many individuals were surprised with hefty tax bills because the state did not withhold taxes on those payments.