Hawaii Bars Business Deductions For Expenses Paid With PPP Loans

May 11, 2021, 12:07 AM

Hawaii businesses that expect to have their federal Paycheck Protection Program loans forgiven can’t claim state deductions for expenses paid with those funds, the Hawaii Department of Taxation said Monday.

The department, in a Tax Information Release, said it is adopting rules outlined in IRS Rev. Rul. 2020-27 for state income tax purposes. That document disallowed deductions for expenses paid with the forgiven pandemic relief loans, which are intended to cover payroll and other normal business expenses.

  • The IRS subsequently issued guidance allowing federal deductions after Congress passed legislation clarifying that business owners should be eligible for those tax ...

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