As many Kentucky businesses have received loans to help them pay employees in the midst of the COVID-19 pandemic, that income for a forgivable Paycheck Protection Program (PPP) loan has been deemed non-taxable at the federal level. Legislation to fix that at the state level passed the Senate unanimously Thursday 33-0.
House Bill 278, sponsored by Rep. Patrick Flannery, would allow small businesses and self-employed individuals in Kentucky who have received a forgivable PPP loan to deduct expenses paid with the loan.
Flannery explained in committee the legislation will not lead to a windfall for larger businesses but will instead protect Kentucky’s small businesses from a large tax burden.
House Bill 278 now goes back to the House for a concurrence vote since it was changed slightly in Senate committee. It will then go to the governor.