As a part of the CARES Act and the latest federal COVID-19 relief package, passed in December, the federal government created the Paycheck Protection Program (PPP). The PPP is a loan program that provides cash-flow assistance to small businesses as an incentive for businesses to retain their employees during the COVID-19 pandemic. If the recipient fully spends the funds on payroll costs, interest on mortgages, rent, and utilities, the loan can be fully forgiven.
Any debt from the PPP loans canceled by the Small Business Administration is specifically excluded from taxpayers’ gross income. Because Montana Adjusted Gross Income includes Federal Adjusted Gross Income, this canceled debt is not included in the calculation of Montana Adjusted Gross Income.
The COVID-19 relief package passed in December also allows taxpayers to deduct expenses paid for with funds received from PPP loans. So, those expenses are included in the calculation of Montana Adjusted Gross Income.
Updated January 26, 2021