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New Tax Credit Available for Certain Employers Who Provide Employees Paid Sick Leave to Get the COVID-19 Vaccine

Posted: April 23, 2021

On April 21, 2021, President Biden announced that new tax credits are available to small businesses under the American Rescue Plan to incentivize vaccinations and to promote employee health around the country.

As previously reported here, tax credits are available to certain employers who voluntarily provide paid sick and/or family leave to employees for COVID-19-related reasons. Now, the paid sick leave tax credit covers paid time off taken by employees to receive and recover from COVID-19 vaccinations. The tax credit covers wages paid to the employee for their time off, up to $511 per day per employee, in order to obtain and/or recover from a COVID-19 vaccination. Like the other tax credits, these tax credits are limited to those employers with fewer than 500 employees.

The new tax credit applies to leave taken to receive or recover from a vaccine between April 1, 2021 and September 30, 2021. Businesses can file for these tax credits on a quarterly basis through September 30, 2021. These tax credits are applied against the employer’s share of the Medicare tax. To further incentivize employer participation, the tax credit is refundable; in other words, the employer is entitled to the full amount of the credit if it exceeds the employer’s share of the Medicare tax. Further information and guidance from the IRS about this tax credit can be found here.

If you have any questions about the new COVID-19 vaccination tax credits or any other issues related to COVID-19 and your business, please contact your regular Saul Ewing Arnstein & Lehr labor and employment attorney.