The IRS announced the expansion of tax credits under the American Rescue Plan Act (ARP) to cover paid time off for employees receiving COVID-19 vaccinations. Employers with fewer than 500 employees and certain government employers may receive a refundable tax credit for providing paid time off for an employee to receive the COVID-19 vaccine and paid time off to recover from the vaccine. An employer who offers a paid day off to an employee in order for the employee to get vaccinated can receive a tax credit equal to the wages paid to the employee for that day, up to certain limits.
The ARP already allowed certain employers to claim refundable tax credits for the cost of providing sick and family leave to employees for COVID-19 related reasons between April 1, 2021 and September 30, 2021. The credits are claimed against the employer’s share of the Medicare tax. Since the credits are refundable, an employer can get paid for the full amount of the credit to extent the credit exceeds the employer’s share of the Medicare tax.
A copy of the IRS announcement may be accessed by clicking here.
