Governor Gavin Newsom and state legislative leaders have announced an agreement on a package of immediate actions intended to speed needed relief to individuals, families and businesses suffering significant economic hardship from the COVID-19 recession. A part of this package is bringing California tax law to partial conformity with federal tax policy regarding loans provided by the Paycheck Protection Plan (PPP) – a proposal that will benefit many small and solo medical practices across California.
“Small businesses are the backbone of our economy,” Newsom said during a Jan. 5 virtual address. “I recognize the headwinds. I recognize the stress. I recognize all that you have been put through over the course of the last year.”
The new California agreement will allow companies who received a PPP loan to deduct up to $150,000 in expenses paid for by those PPP funds. Under the agreement, all businesses that took out loans of $150,000 or less will be able to maximize their deduction for state purposes. Those that took out higher loans will be subject to a deduction ceiling of $150,000.
The package passed Monday also includes:
$100 million in emergency financial aid for qualifying low-income students carrying six or more units at California Community Colleges
$24 million for financial aid and services through Housing for the Harvest, which supports agricultural workers who have to quarantine because of COVID-19
$35 million for food banks and diapers
$6 million for outreach and application assistance targeting University of California, California State University and California Community Colleges students made newly eligible for CalFresh, the food assistance program
Stipends for state-subsidized child-care and preschool providers
Based on publicly available information furnished by the Small Business Administration, 87.9% of awarded physician practices in California received a PPP loan of $150k or less and would be fully covered by this emergency legislation.