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RI Panel OKs Budget Plan Exempting Most PPP Loans From Tax

By Asha Glover · 2021-06-18 18:32:59 -0400

The Rhode Island House Finance Committee approved a $13 billion budget bill that exempts most Paycheck Protection Program loans from tax and includes a conveyance tax hike on high-end real estate.

The committee approved H.B. 6122 on Thursday, which would partly decouple from the federal tax treatment of PPP loans that were part of the federal coronavirus pandemic relief effort. Under the budget advanced by the committee, the state would tax only forgiven loans of more than $250,000. Democratic Gov. Daniel McKee, in his own budget proposal, had proposed taxing forgiven loan amounts of more than $150,000.

Under the new limit, 93% of the approximately 30,000 Rhode Island businesses that received PPP loans would not pay tax on them, according to a statement released by the General Assembly.

"I am immensely proud of this budget, which addresses the important needs in our state, including housing and education, while raising no broad-based taxes," said House Speaker K. Joseph Shekarchi, D-Warwick, in a statement. He added that the budget has the support of the state Senate and governor.

The bill would double the state's $2.30 conveyance tax on each $500 of the purchase price of real estate over $800,000. McKee had proposed taxing property tax transfers in his budget proposal, but set the threshold at $700,000. The tax hike will help create a funding stream for affordable housing, according to a statement.

Additionally, the budget would renew the state's expiring historic properties tax credit for one year and increase funding for the film and tax credit by $10 million in 2022.

"After experiencing the devastation of the COVID-19 pandemic, this budget not only protects and helps Rhode Island's struggling residents, but it will also drive Rhode Island's pandemic recovery into a successful future," House Finance Committee Chair Marvin L. Abney, D-Newport, said in a statement. 

The budget does not include the governor's proposal to legalize, regulate and tax marijuana, but lawmakers intend to continue working on cannabis legalization legislation, according to the statement.

A Senate committee recently advanced legislation that would legalize and regulate cannabis and impose taxes of up to 20% on the sale of cannabis for adults. Under the bill, cannabis sales would be taxed by the state at 10%, an additional 3% sales tax would be imposed at the local level and the state's existing 7% sales and use tax also would apply.

The House of Representatives is expected to vote on the budget on Thursday.

Representatives for Republican leaders of the state House and Senate did not immediately respond to a request for comment Friday.

Representatives for McKee did not immediately respond to a request for comment Friday.

--Editing by Roy LeBlanc.

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