On September 9, Governor Gavin Newsom signed several bills intended to bolster small businesses in California that have been impacted by the COVID-19 pandemic. The new laws are set to take effect on January 1, 2021.
Senate Bill 1447 creates the “Main Street Hiring Tax Credit,” which allows businesses with fewer than 100 employees to claim a credit against their sales and use taxes. Beginning this year, a $1,000 credit is available for each new full-time employee hired in 2020, up to $100,000; however, the credit is only applicable to businesses whose gross income has declined at least 50% in Q2 (starting April 2020).
Assembly Bill 1577 excludes Paycheck Protection Program loans and other federal CARES Act funds from both federal and state income taxes. The new law also forgives the debt on such loans equal to the amount of the recipient’s payroll costs, mortgages, rents, and utility payments.
Senate Bill 115 appropriates $561 million this year in stimulus and construction projects across California.
While signing the bills into law, Governor Newsom remarked that surveys found that as many as 44% of small businesses in California were contemplating closures due to the economic crisis caused by the COVID-19 pandemic. The bills were all passed without opposition in the Legislature.
For more information, contact us at 916-822-8700 or visit the California Legislative Information site at https://leginfo.legislature.ca.gov/.