NFIB State Director Sylvester Smith says Arkansas small business owners are urging their senators to pass HB 1361, a measure that would let small businesses deduct forgiven expenses paid for with federal Paycheck Protection Program (PPP) loans on their state income taxes.
“They can deduct these expenses on their federal income taxes, but they can’t deduct them on their state taxes, and that’s not fair,” Smith said. The federal COVID-19 recovery act signed into law in December reversed an IRS ruling and clarified that PPP forgiven expenses are deductible.
“The pandemic has had a tremendous impact on the state’s economy, and that’s affecting tax revenue,” Smith said. “Small businesses from Little Rock to Jonesboro to Texarkana are barely hanging in there.” Fifteen percent of small business owners surveyed last month by the NFIB Research Center warned they may have to close within the next six months unless economic conditions improve soon.
“Small businesses are really vulnerable right now,” Smith said. “That’s why we’re asking the Senate to vote ‘yes’ when it comes to deducting costs associated with staying open and keeping people employed during these difficult times.”