Small business tax credit offsets time off for vaccinations

Jul 15, 2021
Written by wpengine

In April, Biden announced a new tax credit to fully offset the cost for small businesses and nonprofits with fewer than 500 employees. The tax credits to the businesses provide full pay to their employees for any time off needed to get vaccinated, and for any time it takes to recover from the after-effects of vaccination. Even those who are self-employed can claim this credit under the American Rescue Plan.

The credits provide for up to 80 hours (i.e., 10 workdays) of paid sick leave offered between April 1 and September 30, 2021.

For up to two weeks, that time off can be deducted from the employer-portion of Medicare taxes, up to $511 per day (or $5,110 in total). In the unusual case of an employee needing extra time for themselves or to care for a family member (paid family leave)—10 additional weeks are reimbursable, but at a lower rate of two-thirds of pay, up to $200 per day (or $12,000 in total). If the amount of the credit exceeds the employer’s share of Medicare taxes owed, the excess is treated as an overpayment and refunded to the employer.

In total, the tax enables employers with fewer than 500 employees to claim up to $17,110 for 14 weeks of paid leave for each impacted employee not only to get vaccinated but also to take time off if they have COVID-19 symptoms and are going to the doctor; are getting tested for COVID-19; are under quarantine or isolation order by the government or a doctor (or are caring for someone who is); or have to care for a child whose school or child care provider closed, due to COVID-19.

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