Are Expenses Paid With PPP Loan Proceeds Tax Deductible?

The IRS has confirmed deductibility of expenses paid with PPP funds and revoked previous guidance due to the enactment of the COVID-related Tax Relief Act of 2020 (Act) as part of the Consolidated Appropriations Act, 2021 that was signed into law on December 27, 2020.

This change applies for taxable years ending after March 27, 2020.

Source - IRS Guidance, Revenue Ruling 2021-02

Updated: January 07, 2021