Vt. Adopts Fed. COVID-19 Tax Relief For Unemployment, Loans

Vermont will exempt unemployment insurance income and federal loan forgiveness from state income taxes in 2020 under a budget adjustment bill enacted into law that adopts federal tax relief measures for the COVID-19 pandemic.

H.B. 315, which took effect without Republican Gov. Phil Scott's signature on Friday, adopts portions of the federal tax code, granting Vermonters a tax exclusion on the first $10,200 of unemployment compensation and an exclusion for the forgiveness of loans under the federal Paycheck Protection Program.

The bill specifies that the unemployment exclusion is for individuals with adjusted gross income of up to $150,000 for 2020 and retroactively applies to taxable years beginning on and after Jan. 1, 2020. The loan forgiveness exclusion applies beginning Jan. 1, 2021.

The unemployment compensation tax exclusion was enacted for federal income tax purposes under the American Rescue Plan Act , while the PPP loan forgiveness exclusion was implemented by the Coronavirus Aid, Relief, and Economic Security Act .

H.B. 315 also makes changes to state finances, including directing economic aid and grants, funding for health and housing services and other spending initiatives.

The measure was introduced Feb. 23 by Rep. Matthew Birong, D-Vergennes.

--Editing by Vincent Sherry. 

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