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GOP lawmakers, small businesses urge House Democrats to make loans tax exempt

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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's GOP lawmakers called on House Democrats to make sure Paycheck Protection Program loans are not taxed as income by the state.

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

Hospitality businesses could use the loans for things like payroll, employee benefits, rent, and more.

Other states in the Midwest made these loans exempt from state income tax, but Minnesota still plans on taxing them.

RELATED: Minnesota small businesses face unexpected tax on pandemic relief loans

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

"In Minnesota, businesses are the people who employ Minnesotans and really are the lifeblood of our economy, so it's really wrong of them to do that," Daudt said.

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

The bill waiving state tax on PPP loans passed in the Senate, but has not been passed in the House.

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

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Kendall Jarboe

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