Session Update: Bill Exempting PPP, FPUC from MN Taxation Advances

Minnesota businesses and unemployed individuals who received federal pandemic assistance may be saved from state taxation on those benefits due to a measure that passed the Senate Tax Committee Tuesday, March 2. Senator Tom Bakk, I-Cook, the bill’s author, told the committee that about 102,000 Minnesota businesses received forgivable loans through the federal Paycheck Protection Program, and while the federal government does not consider the money taxable income, Minnesota does. In addition, SF 263 would offer S corporations the opportunity to file as C corporations.

Senator Ann Rest, DFL-New Hope, offered an amendment to the bill that would further exempt state taxation on the additional payments laid-off Minnesotans received through the Federal Pandemic Unemployment Compensation (FPUC) program. “The same kind of equity considerations for these individual workers is what prompted this amendment,” she said.

Tax Chair Carla Nelson, R-Rochester, in support of the amendment, said, “The Senate Tax Committee, in a very bipartisan way, is very focused on helping Minnesotans and their employers recover quicker from this pandemic and the economic fall that has come with that.”

The amendment was adopted unanimously, and SF 263 was referred to the Senate floor.