Many individuals are experiencing a range of side effects from COVID-19 vaccines and are therefore needing to take time off from work. Almost ninety percent of the Pfizer vaccine trial participants ages 18-55 experienced at least one symptom, according to Becker’s Hospital Review, and nearly 80 percent of clinical trial participants over 55 experienced symptoms as well. That lends itself to causing disruption to an individual’s workday following a dose of the vaccine, particularly the second dose.

Employers Incentivized to Offer Paid Leave

The American Rescue Plan made tax credits available to small employers to provide paid leave to employees receiving COVID-19 vaccines, according to an April IRS press release.

Small businesses, defined as employers with fewer than 500 employees, can receive a credit of up to $511 per day to allow employees time off to receive their vaccine or to recover from the vaccine (for up to 10 days). Employers are provided a tax incentive to allow employees to get their COVID-19 vaccination and to recover.

Background

At the onset of the virus, The Families First Coronavirus Response Act legislation required employers to provide paid leave to employees who are suffering from COVID-19 or required to quarantine. Congress then allowed a payroll tax credit for up to $511 per day (for up to 10 days of leave), for sick leave wages or $200 per day if the employee is caring for school-age children or someone with COVID-19.

What Qualifies for the Tax Credit?

On March 11, the American Rescue Plan Act of 2021 expanded the applicability of this credit. The new legislation provides that the credit covers instances where the employer pays the employee for time off while:

This new act related to expansion of the credit is allowable for wages paid from Apr. 1, 2021 – Sept. 30, 2021 and is applied to the payroll tax returns.

If you provided paid time off for employees while they were recovering from COVID-19, caring for someone with COVID-19, or are taking time off to get the vaccine, this tax credit may be available to your business.

Questions?

If questions remain in your mind on how the tax credit may help your business, please contact your Windham Brannon tax professional how to help your employees and your business navigate the tax planning process.