Paid Leave Tax Credit for Vaccinations

Paid Leave Tax Credit for Vaccinations

The Internal Revenue Service and the Treasury Department have made adjustments to the Paid Leave Tax Credit to now allow employers to claim a tax credit for providing paid time-off to employees that take either themselves or a family/household member to get vaccinated for COVID-19, as well as any additional time-off to take care of a family/household member who is recovering from the side effects of the vaccination. These benefits are also extended to self-employed individuals.

Under the American Rescue Plan, eligible employers, including businesses and tax-exempt organizations with fewer than 500 employees, and certain governmental employers, can claim tax credits for qualified leave wages and certain other wage-related expenses (such as health plan expenses and certain collectively bargained benefits).

The Families First Coronavirus Response Act (FFCRA) was the first COVID-related tax act that required certain employers to provide their employees with paid sick leave or expanded family and medical leave for specified reasons related to COVID-19. The employers were allowed to claim a tax credit on any wages paid through December 31, 2020 and report the amount on their quarterly payroll return, Form 941. The Consolidated Appropriations Act extended the eligible period through June 30, 2021, and was later followed by the American Rescue Plan Act, which further extended the period through September 30, 2021.

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