California COVID-19 relief package allows PPP deductions of up to $150k

February 18, 2021

Governor Gavin Newsom and state legislative leaders have announced an agreement on a package of immediate actions intended to speed needed relief to individuals, families and businesses suffering significant economic hardship from the COVID-19 recession. A part of this package is bringing California tax law to partial conformity with federal tax policy regarding loans provided by the Paycheck Protection Plan (PPP) – a proposal that will benefit many small and solo medical practices across California.

The new California agreement will allow companies who received a PPP loan to deduct up to $150,000 in expenses paid for by those PPP funds. Under the agreement, all businesses that took out loans of $150,000 or less will be able to maximize their deduction for state purposes. Those that took out higher loans will be subject to a deduction ceiling of $150,000.

Based on publicly available information furnished by the Small Business Administration, 87.9% of awarded physician practices in California received a PPP loan of $150k or less and would be fully covered by this emergency legislation. 

While the California Medical Association (CMA) supports the state’s swift action to provide financial relief to individuals, small businesses and physician practices impacted by the pandemic, more must be done to address the needs of practices who have been forced to cut or furlough staff or shut their doors during the worst of the COVID-19 pandemic. The fallout from the last year could have a lasting impact on our state’s health care infrastructure, and make it harder for many patients to receive the medical care they need when they need it.

“This is an important first step that will help a number of small and solo medical practices,” said Peter N. Bretan, Jr., M.D., CMA president, “But the state needs to do more to help physician practices that continue to struggle through this pandemic.”

CMA has been out front on the issue with a coalition including business groups, health care providers, and Assemblymember Autumn Burke working to ensure that California tax code fully conforms with federal code providing necessary support to California practices, so that they can keep their doors open and their staff employed, and so that they can continue to provide critical care to their patients.

“If physician practices don’t receive the full extent of the support they need, we risk threatening patients’ access to care and the future viability of our health care delivery system,” said Dr. Bretan. “Aligning California tax code with federal tax code is a simple step that can be taken to provide support to physicians who need it, so that they can provide care to members of our communities when they need it most.”


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