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IRS Releases Information Regarding Employer Tax Credits for Providing Paid Leave to Employees Who Take Time to Receive COVID-19 Vaccines

The Internal Revenue Service and the Treasury Department announced details and issued a related fact sheet regarding tax credits available under the American Rescue Plan Act (ARPA) to help small businesses provide paid leave for employees receiving COVID-19 vaccinations.

Specifically, eligible employers, such as businesses and tax-exempt organizations with fewer than 500 employees and certain governmental employers, can receive a tax credit for providing paid time off for each employee receiving the vaccine and for any time needed to recover from the vaccine. For example, if an eligible employer offers employees a paid day off in order to get vaccinated, the employer can receive a tax credit equal to the wages paid to employees for that day.

ARPA allows small and midsize employers, and certain governmental employers, to claim refundable tax credits that reimburse them for the cost of providing paid sick and family leave to their employees due to COVID-19, including leave taken by employees to receive or recover from COVID-19 vaccinations. The paid leave credits under ARPA are tax credits against the employer’s share of the Medicare tax.  The tax credits are refundable, which means that the employer is entitled to payment of the full amount of the credits if it exceeds the employer’s share of the Medicare tax.

The ARPA tax credits are available to eligible employers that pay sick and family leave for leave from April 1, 2021, through September 30, 2021.

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