Without legislative action, Minnesota would be only state in upper Midwest to tax PPP loans
ST. PAUL, MN — On Tuesday, Rep. Duane Quam, R-Byron, joined the call by Rep. Greg Davids, R-Preston, Republican Lead on the House Taxes Committee who sent a letter to House Taxes Committee Chair Rep. Paul Marquart, DFL-Dilworth, urging quick action to pass a bill exempting forgiven Paycheck Protection Program (PPP) loan income from state taxes in light of the state's projected $1.6 billion surplus. A copy of the letter can be found here.
"Minnesota businesses are struggling, however the progress in vaccinations and treatments is evident in the drastic drop in cases and deaths. Now is not the time to hit so many with a surprise tax bill," said Rep. Quam. "PPP loans were a lifeline for so many businesses and their employees, who otherwise would have otherwise been let go. We need to join all our surrounding states, in fact every other state in the Upper Midwest, and exempt these forgivable loans from taxable income. It needs to be done now, and not shamelessly used as leverage for end-of-session games, it's simply too important."
The letter notes that Chair Marquart was quoted in the Star Tribune over the weekend that "[w]e laid the bill over and we'll see how the finances look." Marquart has indicated support for the measure in other recent media interviews as well.
Last week, Gov. Walz signaled support for the exempting forgiven PPP loans, saying "it's not intended to punish those very businesses it helped," and replying "yeah, we need to find a solution" when asked directly if he supported exempting PPP loans.
According to the Tax Foundation, Minnesota is the only state in the upper Midwest that yet to exempt forgiven PPP loan income from state income taxes.