Restaurants in Wisconsin won’t have to pay 2021 income tax on grants from the Restaurant Revitalization Fund (RRF) under legislation that was signed into law Monday by Gov. Tony Evers.
The measure also allows the aid recipients to deduct any payments made with the funds that would have been deductible if they hadn’t used federal assistance money. That component essentially goes beyond making the received money tax-free by allowing it to be subtracted from taxes as if it was generated through cash flow.
Shielding the funds from income taxes brings Wisconsin’s tax treatment of the money—up to $10 million per restaurant company—in line with the federal exemption that was extended by the U.S. Congress.
Wisconsin’s restaurants have shown “amazing resilience, ingenuity, and flexibility over the last two years, but I know it hasn’t been easy and many are still struggling due to supply chain challenges, inflationary costs, and workforce challenges our state has faced for years,” Evers said in a statement. “I am glad to sign these bills today to help relieve a little bit of stress and worry for business owners as they head into tax season.”
California has similarly shielded RRF aid from state income taxes.
The fund, a creation of the historic American Rescue Plan that President Biden signed into law in March 2021, provided operators of 20 or fewer restaurants with grants of up to $10 million. The money was intended to cover normal operating costs while sales were still depressed by government-ordered capacity restrictions.
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