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New IRS Tax Credits For Paid Vaccination Leave

As part of the American Rescue Plan of 2021, small businesses may claim tax credits to offset paid time off (PTO) related to COVID-19 Vaccinations. The White House is asking employers to provide full pay to employees who need to take time off to get vaccinated or deal with any side effects related to the vaccination. This recent IRS guidance is provided in an effort to help businesses and nonprofits with fewer than 500 employees offset the cost of that PTO, covering payment of wages from April 1, 2021 through September 30, 2021.

In an April 21, 2021 press release, the White House stated: “President Biden is calling on every employer in America to offer 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 … The paid-leave credit that President Biden signed into the law in the American Rescue Plan ensures that no small businesses or nonprofits will lose a single dollar by providing such paid leave to workers receiving a vaccination.”

The credits for the paid leave will be applied against the employer’s share of the Medicare tax, and they are refundable. This means that employers will be able to receive the full amount of the credit, even if it is more than the amount of their portion of the Medicare tax. The credit can be claimed up to 80 hours of paid sick leave paid at the employees regular rate, with a limit of $511 per day, up to a total of $5,110.

For more information, see the recently released Treasury Department Snap Shot or the IRS Fact Sheet.

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for legal advice. If you have any legal questions regarding this content or related issues, then you should consult with a labor attorney for advice.

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