Governor Charlie Baker signs the Massachusetts Unemployment Insurance Bill which includes a tax benefit for canceled PPP loans
Small business owners with some federal loans canceled during the COVID-19 pandemic can now exclude those funds from their gross taxable income in Massachusetts.
Gov. Charlie Baker enacted the law Thursday afternoon, a law that allows “flow-through entities” with canceled Paycheck Protection Program loans to get the same tax benefits as businesses.
The congressional stimulus package in December allowed companies with canceled PPP loans to exclude funds from gross taxable income while still claiming deductions for expenses they paid using PPP money, which which tax experts and critics have described as a “double benefit”.
In Massachusetts, businesses enjoyed the same benefits because the state’s corporate tax code automatically conforms to the federal corporate tax code. But the state has a fixed individual tax code, which means lawmakers have had to pass legislation to ensure small businesses can get the same relief.
Residents who received unemployment benefits will not be taxed on the first $ 10,200 if they live below 200% of the federal poverty line.
The new law also freezes the unemployment insurance rate for calendar years 2021 and 2022, which slows the employer’s annual unemployment insurance contribution rate. The rate is expected to increase by several hundred dollars per employee.
“This legislation takes a thoughtful, comprehensive approach to providing essential relief to facilitate the economic recovery of Massachusetts residents,” Baker said in a letter to lawmakers.
As employers get a stay on rising UI rates, the new law allows the state to issue special bonds to pay off federal advances and pull the trust fund out of the red.
The bill also creates a $ 75 million COVID-19 emergency paid sick leave program similar to federal COVID leave pay, requiring employers to give workers a week of paid leave if they are infected, isolated or quarantined due to COVID-19.
Paid leave also extends to those who are vaccinated or are caring for family members who meet these same criteria.
“The mandate responds well to needs – vaccination, isolation and quarantine – that were not considered when designing the state’s paid family and medical leave program,” said Baker.
Baker returned two amendments that would change the state’s paid sick leave program.
The first would require employees on sick leave related to COVID-19 not to receive less than their regular rate of pay. The amendment would cap sick pay at $ 850 or two-thirds of the regular rate of pay for family leave.
The program would provide benefits to part-time employees with “a regular schedule with constant hours per week” provided that paid sick leave equals the number of hours an employee works per week, on average over a schedule. two weeks.
The Second Amendment would extend a tax credit of $ 40 per employee to employers who do not have access to the tax credit under the federal vacation program. Extending the tax credit for all employees who are not covered, Baker said, would make it easier for employers to claim the credit from the Executive Office of Administration and Finance without risking having to rely on documents that could break private health laws. .
An employer should file the credit application and any changes related to the application by December 31.
This amendment would also set the end date of September 30 for the COVID-19 emergency paid sick leave program. Baker said setting an official deadline would resolve any uncertainty between employers and workers, as the sick leave program’s end date would be different whenever the $ 75 million fund dries up.