What Kind of Tax Relief (If Any) Can Small Businesses Expect in 2021?

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Small business owners have been praying for an end to 2020. Unfortunately, the first few months of 2021 will be anything but easy. Still, entrepreneurs are hoping for better days as the COVID vaccine is rolled out. Tax relief may also be around the corner, as we explain below:

PPP Funding and Deduction Changes

While recent concerns about deductibility have called the wisdom of the Paycheck Protection Program (PPP) into question, this remains a desirable option for many struggling entrepreneurs.

A potential COVID relief package including substantial boasts to PPP funding is currently being negotiated. If additional funding is provided, more businesses could receive access to PPP loans in 2021. More importantly, however, current and potential participants are looking to both Congress and the future Biden administration for relief from restrictions on deductions recently referenced by the IRS.

No guarantees exist, but it’s possible that businesses that received loan forgiveness through PPP will eventually be able to write off normal business deductions that these loans covered. The best bet may be S. 3612 (116) — the Small Business Expense Protection Act.

State-Based Tax Programs

Beyond applying for PPP loans, some businesses can look to local government agencies for assistance in 2021. In California, for example, applications for the Main Street Small Business Tax Credit are already underway. Additionally, California will provide three-month tax deferral for dental practices. Similar options are in the works all around the nation.

Take a close look at tax relief efforts in your area to determine whether you might qualify. A local tax resolution specialist can introduce you to options you might otherwise neglect.

At the Highland Tax Group, we keep on top of both federal and local tax concerns. Reach out today to learn how we can help you find tax relief in 2021.