The lawmakers of Mass. reach agreement on tax breaks | New
BOSTON – A plan to give tax breaks to workers and businesses affected by the pandemic will head to Gov. Charlie Baker’s office after legislative leaders reached a compromise on the legislation on Monday evening.
The $ 350 million package, which still requires procedural votes, reverses unemployment insurance rate increases, waives state taxes on federal paycheck protection program grants, and establishes holiday program emergency payments allowing workers time off for COVID-19 issues.
“We need to support our businesses and our workers who are still struggling,” said Representative Paul Tucker, D-Salem. “This is a very good step forward.”
A key provision allows workers who were unemployed last year or this year to exempt up to $ 10,200 of the unemployment benefits they received from their state taxes, if their household income is lower at 200% of the federal poverty line.
The proposal also provides relief for businesses by reducing planned increases in unemployment insurance taxes for the next two years.
A multibillion-dollar deficit in the state’s unemployment fund, created by a crash in pandemic-fueled jobless claims over the past year, is expected to raise rates paid by employers by 60% in average from next year.
The plan also creates a new commission to study how to replenish the unemployment fund and allows the state to borrow up to $ 7 billion from the federal government to maintain unemployment benefits.
Businesses will face a new excise tax on employee wages – which legislative leaders say will average $ 57 to $ 66 per year – to pay off interest on federal loans. This tax would end next year.
Additionally, employers who accepted PPP loans that were canceled by the federal government would not have to pay state income tax on the money.
Most of these paycheck protection loans – about 4 out of 5 – were not canceled in the 2020 tax year. Recipients of loans that were canceled still have one month to apply for an extension. their state taxes pending a word on the proposal, according to the state Revenue Department.
Business leaders say tax relief is crucial.
“It is not a permanent solution, but it is a good first step to avoid this rate shock that a lot of companies would see if nothing was done about the tax hike,” said Chris Carlozzi , State Director of the National Federation of Independent Businesses. .
Another provision of the bill creates a $ 75 million COVID-19 emergency sick leave program, which will allow full-time workers up to 40 hours of paid leave if they are infected and need to take action. quarantine or caring for a family member affected by the virus. Part-time workers can also benefit from time off, according to the proposal.
Lawmakers were also considering extending the state’s income tax deadline from April 15 to May 17, but the Revenue Department took unilateral steps to do so last week. This follows a decision by the Internal Revenue Service to extend the deadline for filing federal income tax.
The Legislative Ways and Means Committee is reviewing Baker’s $ 46 billion preliminary budget that includes additional relief for business and workers.
Massachusetts also expects to receive nearly $ 8 billion in federal funding for tests and vaccines, schools, businesses and local governments as part of a 1.9 billion pandemic relief plan. trillion dollars signed by President Joe Biden two weeks ago.
The state House and Senate are expected to hold a final procedural vote on the tax relief measure on Thursday before going to Baker’s office for review.
Christian M. Wade covers the Massachusetts Statehouse for newspapers and the North of Boston Media Group websites. Email him at [email protected]