The Taxability of COVID-19 Financial Relief Funds

The rules have been set and the New Hampshire Department of Revenue Administration (NHDRA) is helping taxpayers understand the tax implications. Here are the key points of what has been set:

• All recipients of state-level relief (from the State of New Hampshire’s portion of the federal CARES Act funds) who are required to file a BPT return, should report the amounts as income.
• Loans: Paycheck Protection Program (PPP) loans, Emergency Injury Disaster Loan (EIDL) loans, as well as the New Hampshire Main Street Grants, Self-Employed Livelihood Fund and other state controlled federal grants (healthcare providers, farms, daycares) will not be taxable for BPT purposes UNLESS that loan is forgiven or discharged; all qualified expenses paid with these funds will still be deductible for New Hampshire purposes.
• Grants: Recipients of grants ARE taxable by the State of New Hampshire.
• Wages paid through the PPP program will still be subject to the BET tax.

Please note that in some instances the federal tax treatment of federal-level relief will be different from the state-level tax treatment of those same funds.