Update: Maine Governor Proposes Conformity to Federal Treatment for First $1 Million of PPP Loans

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On February 9, 2021, Maine Governor Janet Mills proposed revisions to the supplemental budget that conform to the federal tax treatment of Paycheck Protection Program (PPP) loans for the first $1 million of PPP loan proceeds. Under the proposal, Maine taxpayers will be able to both exclude the forgiven portion of a PPP loan from federal taxable income and deduct eligible business expenses paid with forgiven loan proceeds—up to $1 million—for Maine income tax purposes.

Taxpayers will be required to add back the forgiven portion of the loan that exceeds $1 million. According to the governor’s press release, this compromise will provide full state tax relief to 99.1% of Maine businesses that received PPP loans. The new proposal is still estimated to cost the state about $82 million, down from $100 million.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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