Here’s an update on House Bill 334: Temp Align PPP Treatment to Federal Treatment. This bill would allow individuals and corporate taxpayers an income tax deduction for expenses paid using a loan forgiven under the Paycheck Protection Program. The Senate PCS for HB 334 replaces its contents with the JOBS Grant Program and Tax Changes for 2021. The Senate PCS for House Bill 334 has four parts.
- JOBS Grant Program: Appropriates $1 billion of federal funds from the American Rescue Plan Act of 2021 to provide grants to NC businesses that received a COVID-related loan from the State or federal government. The maximum grant amount would be $18,750 and determined by multiplying the lesser of the award amount or $250,000 of the award by 7.5 percent.
- Tax Policy Initiatives includes the following:
- Reduces individual and corporate income taxes
- Simplifies the franchise tax
- Extends the sunset on the mill rehabilitation tax credits for two years
- Modifies the gross premiums tax and the tax on cigars
- Imposes a sales tax on peer-to-peer vehicle rentals
- Changes the calculation of the late tax payment penalty
- Exempts vaccines and cemetery property from the local property tax base
- IRC Update and Related Changes: Updates the IRC reference date from May 1, 2020 to April 1, 2021. This change permanently reduces the medical expense deduction threshold from 10 percent of AGI to 7.5 percent. This Part also enacts a SALT cap election for pass-through entities and provides a separate net operating loss calculation for individual taxpayers.
- Revenue Laws Study Committee Recommendations: Makes technical, clarifying, and administrative changes to the tax law as suggested by the Department of Revenue and recommended by the Revenue Laws Study Committee.
The Senate substitute for HB 334 passed the Senate and awaits a concurrence vote in the House. If the House does not concur with the Senate proposal, a conference committee will be appointed to negotiate the differences between the two approaches to PPP forgiveness and tax policy.
Another notable piece of legislation that made its way through the General Assembly last week was Senate Bill 722: Revise Municipal Redistricting/ Census. Senate Bill 722, as passed by the House, would delay the Raleigh municipal elections from October 2021 to November 2022 and move future Raleigh municipal elections to even numbered years.
Additionally, the House proposal changes the election to one of non-partisan plurality, meaning that candidates will not run under a traditional party ballot and the runoff requirement would be eliminated. The terms of the officers currently serving on Raleigh City Council would be extended until November 2022 or his/her successor is elected and qualified in 2022.
It is important to note that the original version of SB 722 passed by the Senate would have moved all municipal elections to March of 2022 and did not make exceptions for individual municipalities.
We will continue to monitor and keep you apprised of its progress. Particularly as it relates to partnership on future bond proposals.
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