RI Lawmakers Raises PPP Tax Threshold To $250,000 In Budget

PROVIDENCE, RI — Certain businesses will have to pay taxes on their coronavirus relief loans, according to the new state budget. House lawmakers raised the threshold to $250,000, and will only apply to those that made a profit.

The House Finance Committee raised the threshold by $100,000 from the $150,000 initially proposed by Gov. Dan McKee. Under the new guidelines, about 93 percent of the businesses that received a total of $2.6 billion will be exempt from paying taxes on their loans, the General Assembly said.

"The PPP program provided a lifeline to businesses large and small during the COVID-19 pandemic," McKee said. "While my Administration’s original proposal gave significant tax relief to thousands of Rhode Island small businesses that received these funds, I am pleased that, because of the projected budget surplus, we will be able to extend that tax relief to even more businesses across the state."

House Speaker K. Joseph Shekarchi said the decision was made in partnership with the governor and Senate President Dominick Ruggerio.

"PPP loans were a lifeline during the pandemic for many businesses. However, some recipients accepted PPP loans and then profited from them," Shekarchi said. "Only businesses that profited from the loans will be taxed. Of the approximately 30,000 Rhode Island businesses receiving PPP loans, this may impact only 2,000 businesses."

The Rhode Island Hospitality Association came out against the decision, calling it a "surprise tax" that will force certain business owners to re-file their taxes.

"The RI Hospitality Association is disappointed in the General Assembly’s decision to include the proposed tax on the Payroll Protection Program in the state budget," CEO Dale Venturini said. "RIHA is opposed to taxing the PPP, which was designed to keep employees on the payroll and businesses operational during a global pandemic. In December 2020, Congress took action to ensure that these funds were exempted from taxation ... The PPP was designed to help small businesses, not penalize them for remaining operational."