Without legislative action, Minnesota would be only state in upper Midwest to tax PPP loans
ST. PAUL, MN — On Tuesday, Rep. Barb Haley, R-Red Wing, 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 cannot wait for the end of session horse trading that happens at the State Capitol," said Rep. Haley. "PPP loans were lifelines for businesses to keep employees on staff and to not have to close their doors when they were ordered to shutdown for public health purposes. It is unconscionable to now tax that money, especially when all of our surrounding states do not do so. House Republicans want to move on this now, the DFL Taxes Chair has expressed support, and so has the governor — we need to get it done now and not make already struggling Minnesota businesses wait and hope they aren't caught up in end of session gamesmanship."
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.