On February 18, 2021, Wisconsin Governor Tony Evers signed Assembly Bill 2, which, in part, addresses conformity to the federal tax treatment of Paycheck Protection Program (“PPP”) forgiveness.
As Wisconsin taxpayers prepare their tax returns, it is important they be aware of the new rules revolving around the PPP loan forgiveness.
The Consolidated Appropriations Act of 2021 (H.R. 133) clarified the tax treatment of forgiveness of PPP loans. For both First Draw PPP Loans and Second Draw PPP Loans, forgiveness is not included in gross income, and deductions for expenses paid for with forgiven amounts are allowed.
Wisconsin Assembly Bill 2 includes conformity to the federal tax treatment of the PPP loans, meaning Wisconsin also excludes the forgiven amounts from gross income and permits the deductions.
In summary, a taxpayer with a First Draw PPP Loan and a Second Draw PPP Loan can exclude the forgiven amounts from gross income and take deductions at both the federal and state level.