1. (a) Any subsidy payment for covered loans as described in Section 1112(c) of the federal Coronavirus Aid, Relief, and Economic Security Act; any amounts received as Emergency EIDL Grants under Section 1110 of the federal Coronavirus Aid, Relief, and Economic Security Act, as amended by Section 332 of the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act; and any amounts received as Grants to Shuttered Venues or as Targeted EIDL Advances under Sections 324 or 331, respectively, of the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act:

   1. (1) Shall be exempt from financial institution excise tax imposed by Chapter 16 and the income taxes imposed by this chapter to the same extent as the amount is exempt from federal income tax under Section 278 of the RELIEF Act.
   2. (2) Shall not be considered in determining deductibility of otherwise deductible expenses, such as payroll, utilities, mortgage interest, and rent, allowed to be paid with the exempt funds, to the same extent as the expenses remain deductible in calculating federal income tax under Section 278 of the RELIEF Act.
   3. (3) Shall also be excluded from any and all calculations in determining a taxpayer’s federal income tax deduction pursuant to Chapter 16 or this chapter.
2. (b) This section applies to tax years ending after March 27, 2020.

(Act 2021-1, §4.)