Hawaii Senate Bill SB1254

Hawaii 2022 Regular Session

• Introduced: 1/27/21
• Refer: 2/1/21

Caption

Relating To Conformity With Federal Law.

Impact

By conforming to federal law, SB1254 ensures that individuals receiving PPP loan forgiveness will not have the forgiven amounts counted as taxable income in Hawaii. This will help alleviate the tax burden on small businesses recovering from the economic impact of the pandemic, thus promoting economic stability. The bill also clarifies that no tax deductions or tax attributes will be denied due to the loan forgiveness, streamlining the process for eligible recipients and aligning with the federal economic aid initiatives.

Summary

Senate Bill 1254 aims to align Hawaii's income tax law with certain federal provisions concerning the treatment of funds received under the Paycheck Protection Program (PPP). Specifically, the bill addresses the treatment of amounts that are forgiven under section 7(a)(36) of the Small Business Act. This alignment is significant as it recognizes the federal guidelines enacted to support small businesses during the COVID-19 pandemic through loan forgiveness and ensures that the state tax implications correspond accordingly.

Contention

Discussions around SB1254 may involve varying perspectives regarding federal versus state authority in tax regulation. While proponents argue that aligning state tax laws with federal provisions provides much-needed support for local businesses, there could be concerns about the implications of federal influence on state lawmaking. Notably, this bill reflects ongoing adjustments in tax policy aiming to navigate the challenges posed by the economic conditions stemming from the COVID-19 pandemic.