Companies supported by a tax relief program | Local News
BOSTON – Businesses facing double-digit increases in unemployment insurance and federal disaster loan taxes are now breathing a sigh of relief.
$ 350 million pandemic relief program, signed by Gov. Charlie Baker last Thursday, rolls back unemployment insurance rate increases for businesses, rolls back state taxes on federal protection program grants paychecks and establishes an emergency paid vacation program for workers. Problems related to COVID-19.
A key provision of the bill cuts planned unemployment tax increases for the next two years.
A multibillion-dollar deficit in the state’s unemployment fund, created by a pandemic-fueled unemployment claim crash over the past year, is expected to push employer-paid rates up 60% in average from next year.
The plan Baker signed also authorizes the state to borrow up to $ 7 billion from the federal government to maintain unemployment benefits.
Businesses will pay a new excise tax on employee salaries – which legislative leaders say will average $ 57 to $ 66 per year per employee – to repay interest on federal loans. This tax would disappear next year.
Additionally, employers who accepted PPP loans that were later canceled by the federal government would not have to pay state income tax on the money. Only 1 in 5 of these loans were canceled in the 2020 tax year.
In a letter to lawmakers, Baker said the measure “takes a thoughtful and comprehensive approach to provide critical assistance to facilitate economic recovery for the people of Massachusetts.”
Business leaders praised the tax break and lowered unemployment insurance rates.
Chris Carlozzi, Massachusetts state director for the National Federation of Independent Businesses, said many businesses “breathe a sigh of relief” that they won’t be saddled with a big tax bill as they begin to pay off. recover.
“These are two crucial policies that will directly help struggling small businesses that have been ravaged by the pandemic and now hope to lead the state’s economic recovery,” he said.
The measure Baker signed also included relief for workers who were unemployed last year or this year, allowing them to exempt up to $ 10,200 from unemployment benefits they were collecting from state taxes if their household income is less than 200% of the federal poverty line.
Another provision creates a $ 75 million COVID-19 emergency sick leave program, which will give full-time workers 40 hours of paid leave if they are infected and need to quarantine or care for a family member affected by the virus.
“The mandate responds well to needs – immunization, isolation and quarantine – that were not envisioned when the state’s paid family and medical leave program was designed,” Baker wrote to lawmakers.
However, Baker sent that part of the bill back to lawmakers with requested technical changes, including a proposed cap on benefits. He also proposed extending a tax credit of $ 40 per employee to companies that do not qualify for a federal paid vacation program.
Lawmakers can either accept Baker’s amendments to the bill or cancel them.
The Legislative Ways and Means Committee is reviewing Baker’s $ 46 billion preliminary budget, which 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 pandemic relief program 1, $ 9 trillion signed by President Joe Biden last month.
Christian M. Wade covers the Massachusetts Statehouse for The Salem News and its sister newspapers and websites. Email him at [email protected].