The California Small Business COVID-19 Relief Grant Program, a $2.1 Billion state-funded package, was created to provide much needed relief to California small businesses. Part of the state and Governor Newsom’s plan includes a measure that would allow up to $150,000 in PPP expenses to be eligible for deduction on state returns. While the details of the measure are still in negotiation, we expect to see movement on this in the next few weeks.

How the Measure Impacts the California R&D Tax Credit
Businesses that have used PPP loans to pay for Qualifying Research Expenses (QREs) cannot qualify the amounts covered by the loan towards the research credit. Many taxpayers used PPP funds to cover payroll expenses which have historically been the largest driver of credits. With the passage of this bill, taxpayers would be allowed to claim up to $150,000 of the covered expenses towards the credit.

Questions about the interaction between R&D Tax Credits, PPP, and other COVID-19 relief programs such as Employee Retention Tax Credits? We’re here to help. Contact us today for assistance.

Author: Kevin Zolriasatain

About the Author

Kevin Zolriasatain | KBKG PrincipalKevin Zolriasatain – Principal
Kevin is a Principal and Practice Leader of KBKG’s Research and Development (R&D) Tax Credit Services from our Pasadena headquarters. He has over 14 years of consulting experience providing R&D tax credit services to companies of various sizes. Prior to KBKG, he spent nearly a decade at PricewaterhouseCoopers focusing on securing R&D Tax Credits for Fortune 500 companies. Kevin enjoys working with small to mid-size business owners and over his career has documented hundreds of millions of dollars in research credits. » Full Bio