Tax Credit for Employee Vaccination Leave

President Biden Announces New Tax Credit for Employee Vaccination Leave

In April 2021, President Biden announced from the White House a new tax credit in the American Rescue Plan that will fully offset the cost for small businesses and nonprofits who provide paid leave for employees to get vaccinated. In this initiative, President Biden calls upon every U.S. employer to offer full pay to employees who need time off to get vaccinated or time off to recover from the after-effects of the vaccination.

The paid leave tax credit will offset the cost for employers with fewer than 500 employees to enable them to provide full time pay. This is a company’s investment in the health, safety and productivity of employees in a company’s workforce and their local community. He claims that “No working person in this country should lose a single dollar from their paycheck to take time to get the shot or recover from it.”

Details of the Small- and Medium-sized Businesses American Rescue Plan

A paid leave tax credit will offset the cost for small- and medium-sized business and nonprofits with fewer than 500 employees for up to 80 hours (or 10 work days) up to $511 per day of sick leave offered between April 1 an September 30, 2021 at no cost to the employer. The tax credit will apply to almost half of all the private sector employees across the country.

According to the Internal Revenue Service (IRS), “Eligible employers are entitled to the paid leave tax credit for leave taken by employees who are not able to work or telework due to reasons related to COVID-19, including leave taken to receive COVID-19 vaccinations or to recover from any injury, disability, illness or condition related to the vaccines.” The paid leave credits are tax credits again the employer’s share of the Medicare tax and are refundable. If the credits surpass the employer’s share of the Medicare tax, the employer is entitled to the credit’s full amount.

In addition, the IRS states that “Eligible employers can keep the federal employment taxes that they otherwise would have deposited, including federal income tax withheld from employees, the employees’ share of social security and Medicare taxes and the eligible employer’s share of social security and Medicare taxes with respect to all employees up to the amount of credit for which they are eligible.”

To learn more about the paid sick leave tax credit and how to claim it on your quarterly tax filing, view the fact sheet provided by the IRS or contact Benefit Providers locally at 703-370-2226 or Typically the total quarterly paid sick and family leave can be reported on Form 941, the Employer’s Quarterly Federal Tax Return.

Contact Benefit Providers to Learn More

Benefit Providers/ECCA Payroll Services can help explain the benefits of the American Rescue Plan tax credits and other benefits for which your company or nonprofit are eligible. We can also help with your tax planning and payroll services.


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