This morning, the Virginia tax conformity bill HB 971 was signed into law by Virginia Governor Glenn Youngkin. The bill includes full conformity to the American Rescue Plan Act, which among other provisions, allows full deductibility of expenses paid or incurred with forgiven PPP (Paycheck Protection Program) loan proceeds for taxable years 2021 and after.
This essentially means that PPP loans are not taxable in Virginia for the tax year 2021, which is a departure from the prior year (tax year 2020) when there was a $100,000 cap on loan deductibility.
