RALEIGH, N.C. (AP) — Legislation that would provide several hundred million dollars in North Carolina state income tax breaks for businesses and the unemployed received final House approval on Thursday.
The bill, which received nearly unanimous support, would allow businesses to deduct from their taxable income expenses they paid for with proceeds from federal Paycheck Protection Program loans issued to them and later forgiven. The measure also would exempt from income taxes the first $10,200 of unemployment benefits that filers received in 2020.
In both provisions, North Carolina tax law would become aligned with what federal tax rules now allow on IRS returns while providing financial assistance during the COVID-19 pandemic.
The bill's future is unclear in the Senate, where Republicans aren't in agreement on whether to give businesses the additional tax break, or instead give them assistance by another method.
Senate leader Phil Berger said Thursday it could be a couple of weeks before the measure is considered. The individual income tax deadline is May 17. Many business owners report business income through their individual returns.
The provisions addressing PPP loans, which cover both 2020 and 2021, would mean state coffers would take in $600 million less revenue through mid-2023. It’s unclear whether federal coronavirus relief money earmarked for North Carolina could cover that cost.
A row within the House Republican Caucus over a narrower version of the current measure resulted in a senior leader on the House Finance Committee being removed from the panel this week by Speaker Tim Moore.
Rep. Julia Howard, the former co-chair of the committee, was the only House member who voted against the bill Thursday.