On Thursday, February 18, 2021, Wisconsin Governor Evers applied his signature to AB-2 and issued a statement highlighting $480 million in tax savings included in the legislation, Wisconsin’s first new state law for 2021.
The legislation — originally a routine revision of the state tax code primarily to match changes in the federal code — took on added attention after lawmakers added language to help recipients of the federal Paycheck Protection Program (PPP), instituted in 2020 to help small businesses hit by the COVID-19 pandemic.
The change specifically helps businesses that received PPP loans and received loan forgiveness. Forgiven PPP loans were already tax-free for federal and state purposes. In addition, following the federal tax treatment, businesses are now allowed to also take an income tax deduction on their state income tax return for these “covered expenses”.
The tax benefit was written into the federal tax code already following the passage of the Consolidated Appropriations Act, 2021 in late December 2020. The law Governor Evers signed on Thursday incorporates it in the state tax code as well.
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