On Wednesday, Governor Youngkin signed into law tax conformity legislation so Virginians can begin appropriately planning for their 2021 tax year filings.
Most notable in the new law, taxpayers who received Paycheck Protection Program loans (PPP) and Economic Injury Disaster Loans (EIDL) in calendar year 2021 will be able to fully deduct the forgiveness on these loans. This only applies to PPP and EIDL loans received in 2021 and is not retroactive to 2020. The 2020 law limited the deductibility on these loans to $100,000, a fact that has remained unchanged.
The law also confirmed that $100,000 of the PPP loan proceeds and Rebuild Virginia grant proceeds would be deductible for entities with other fiscal year ends in 2020, such as June 30th or September 30th. As a result, any non-calendar year-end filers may be able to amend their 2019 returns for these deductions if not previously taken.
The new law advanced the conformity dates with the Internal Revenue Code through December 31, 2021 on things such as special depreciation allowances and carry-back of net operating losses. The law also ensures full conformity for the American Rescue Plan Act, including the Restaurant Revitalization Fund.
According to a statement from Governor Youngkin, this bill is expected to save Virginia individual and business taxpayers $201 million in taxes.
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