The American Rescue Plan Act expands the paid leave and paid family leave tax credit for employers with fewer than 500 employees as part of an effort to encourage workers to get the COVID-19 vaccine. Employers are eligible for up to $17,110 in tax credits for each employee that takes paid leave due to COVID-19 in the second and third quarters. The paid leave must be related to illness, quarantine, testing, and receiving or recovering from receipt of the vaccine. Provisions are also available that cover caregivers.
Tax credits are available for up to 80 hours (10 days) of paid sick leave, capped at $511 per day up to $5110. Additionally, a credit is available for paid family leave up to 12 weeks, capped at $200 per day up to $12,000, at two-thirds of the employee’s regular pay rate for employees providing care for quarantining individuals or school or childcare provider closures. These credits are refundable credits against the employer’s share of Medicare tax. The credit may be claimed quarterly through September 30, 2021.
Further guidance is available from information provided by the IRS at Employer Tax Credits and COVID-19 Paid Leave site and the Department of the Treasury’s Paid Leave Snapshot.
SMACNA has also provided guidance on Tax Credits for Employers Who Voluntarily Provide E-PSL and E-FMLA Extended
Be sure to also register for SMACNA’s ARPA Webinar: Pension Plans and the American Rescue Plan taking place on May 6 at 1:00 p.m. ET.