Tax Credits For Certain Employers Paying for Time Off For COVID-19 Vaccinations

Topics: COVID-19, Legal Information, New Laws & Legislation

On April 21, 2021, the Biden administration detailed the provision of tax credits for certain businesses that pay employees for time off to get COVID-19 vaccines or due to vaccine side effects.  The tax credits are funded by the American Rescue Plan Act of 2021 and are part of President Biden’s plan to encourage employers to use their resources to boost vaccinations. 

The tax credits are available for businesses with fewer than 500 employees, for up to 80 hours in paid time off, capped at $511 per day and $5,110 in the aggregate.  Eligible businesses can claim the credit quarterly through September 30, 2021.  Self-employed individuals may claim comparable tax credits on their individual Form 1040, U.S. Individual Income Tax Return.

The Internal Revenue Service and the U.S. Department of the Treasury issued details and guidelines for the tax credits on Wednesday, link here.  The tax credits are credits against the employer's share of the Medicare tax and are refundable, which means that employers are entitled to payment of the full amount of the credits if the amount exceeds the employer's share of the Medicare tax.