Dear Friend,

Senator Baldwin has cosponsored the bipartisan Small Business Expense Protection Act, legislation which would ensure small businesses can deduct expenses paid with a forgiven Paycheck Protection Program (PPP) loan from their taxes.

"Wisconsin small businesses still need help to make it through this economic crisis. Business owners who accepted PPP loans to keep their workers employed and cover operating expenses should not be on the hook for tax increases after receiving relief. We need to take action before the end of the year to support small businesses by ensuring expenses paid with a forgiven PPP loan are tax deductible," said Senator Baldwin.

When the PPP was created in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, Congress intended for businesses that paid for expenses with forgiven PPP loans to be able to deduct these expenses from their taxes.

But the Treasury Department, along with the Internal Revenue Service (IRS), have determined that expenses paid with a forgiven PPP loan are not tax deductible - including expenses that are typically deductible like wages and rent.

The bipartisan Small Business Expense Protection Act will clarify that PPP loan recipients whose loans are forgiven are not required to treat the loan proceeds as taxable income and can deduct expenses paid with a forgiven PPP loan from their taxes. The bill was originally introduced by Senators Chuck Grassley (R-Iowa), John Cornyn (R-Texas), Ron Wyden (D-Ore.), Marco Rubio (R-Fla.) and Tom Carper (D-Del.)