Tax credit for COVID-19 vaccination paid time off
As part of the American Rescue Plan, the Federal government is providing a new tax credit for small businesses and nonprofits to fully offset the cost to provide paid leave for employees to get vaccinated.
This tax credit will allow these employers to provide paid leave for employees to get a COVID-19 vaccination and for any time their employees may need to recover from that vaccination at no cost to the employer.
The tax credit is applicable to businesses and nonprofits:
- With fewer than 500 employees
- Who offer paid sick or family leave to your employees through September 30, 2021
- Who have employees who take paid leave due to COVID including for illness, quarantine, getting tested or vaccinated, or caregiving
For the 2nd and 3rd quarters of 2021, applicable entities may take tax credits for wages up to 80 hours of paid sick leave in an amount equal to either:
- the employee’s regular wage, capped at $511/day, up to a total of $5,110 if the employee was sick or quarantining, awaiting the results of a COVID test, obtaining or recovering from a vaccine
- two-thirds of the employee’s regular wage, capped at $200/day, up to a total of $2,000, if the employee was taking time to care for someone quarantining or to provide care due to COVID-19 school or childcare provider closures.
The IRS has posted a fact sheet to educate employers on how to claim the paid sick leave credit on their quarterly tax filings while the Treasury Department has created a snapshot that provides additional details.
Please reach out to your RINA professional if you have any questions.