Good news for Californians – California AB 80, passed in the Senate and approved by the Governor yesterday, April 29, 2021, is scheduled to take effect immediately as an emergency statute.The bill excludes any advance grant amount – as defined, issued pursuant to specified provisions of the CARES Act or the Consolidated Appropriations Act, 2021, and covered loan amounts forgiven pursuant to the Consolidated Appropriations Act, 2021 – from income tax for tax years after January 1, 2019.As stated in California’s Legislative Counsel Digest, “the bill would exclude, for taxable years beginning on or after January 1, 2019, from gross income any advance grant amount, as defined, issued pursuant to specified provisions of the CARES Act or the Consolidated Appropriations Act, 2021, and covered loan amounts forgiven pursuant to the Consolidated Appropriations Act, 2021.” In other words, California will conform to federal regulations relating to PPP loans. Up until now, California intended to tax the grant amounts as income and or disallow expenses paid with the grant money. But Californians can breathe a sigh of relief.
AB 80 has temporarily delayed California state tax filings as many California businesses and their tax preparers seek clarity in order to properly advise their clients in the preparation of their tax returns. This regulatory change will help ensure businesses rebound stronger with tax relief provisions that continue to assist businesses hit hardest by the COVID-19 pandemic.
