GOP lawmakers and small business urge House Democrats to exempt loans from tax

ST. PAUL, MN – The question remains whether Minnesota small business owners who received loans during the pandemic will have to pay state taxes on them.

In a virtual meeting Thursday, Minnesota GOP lawmakers called on House Democrats to ensure paycheck protection program loans are not taxed as income by the state.

GOP lawmakers were joined by two small women-owned businesses in the Twin Cities who raised concerns.

Hotel companies could use the loans for things like payroll, benefits, rent, etc.

Other Midwestern states have exempted these loans from income tax, but Minnesota still plans to tax them.

RELATED: Small businesses in Minnesota face unexpected tax on pandemic relief loans

House Minority Leader Kurt Daudt said House Democrats were waiting to pass the tax exemption proposal until a full budget amendment was made.

“In Minnesota, companies are the people who employ Minnesotans and are really the lifeblood of our economy, so it’s really wrong of them to do that,” Daudt said.

With the tax deadline fast approaching, small businesses may have to re-do their taxes if legislation is passed in the coming weeks.

The bill exempting state tax on PPP loans was passed in the Senate, but was not passed in the House.

He needs congressional approval before going to Governor Tim Walz to sign.

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