The New York Department of Taxation and Finance announced that the state will conform to federal rules on the taxation of forgiven loan funds received through the Paycheck Protection Program (PPP). As stated in the CARES Act, the forgiveness of a PPP loan is tax-exempt. For business income tax purposes, New York will treat this income the same way: tax-exempt.
The federal and state provisions apply to both first draw and second draw PPP loans. Additionally, New York will conform to the federal government’s position that expenses funded with PPP loan funds are tax-deductible.