State tax treatment of Federal Relief Programs
Over the past two years, federal programs such as Targeted Economic Injury Disaster Loan Advances, Restaurant Revitalization Grants, Small Business Administration forgivable loan assistance, and the Shuttered Venue Operators Grant, provided critical support to small businesses, nonprofits, and venues in Minnesota and across the country during the COVID-19 pandemic.
If taxpayers excluded the grant or forgivable loan income mentioned above from their federal tax returns, they must add it back to their Minnesota tax returns on the year the income was received.
Federal and State Tax Treatment of Federal Relief Programs
As amended in the American Rescue Plan Act, the federal government excluded the relief programs mentioned above from federal taxable income. Minnesota has not conformed to these sections of the Internal Revenue Code. The funds are considered income for Minnesota tax purposes.
Because Minnesota has not conformed to the federal exclusion, taxpayers will need to add it back on their nonconformity schedules on their returns.
Contact Us with Questions
The Minnesota Department of Revenue will work with any taxpayer who needs assistance or is unable to resolve their tax obligation. We have a variety of options to help taxpayers who are unable to pay what they owe.
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