In an effort to encourage more individuals to get vaccinated, President Joe Biden has formed a paid-leave tax credit for employers that provide full pay for employees who take time off in order to get (and recover from) a COVID-19 vaccination.  The credit is available for qualified wages paid between April 1, 2021, and September 30, 2021.

The American Rescue Plan Act of 2021 allows certain employers to claim refundable tax credits that reimburse them for the cost of providing paid leave to their employees for the purpose of receiving and recovering from the COVID-19 vaccine. The tax credit is available for small businesses, or organizations with fewer than 500 employees, as well as certain governmental employers. An eligible employer can offer employees a paid day off to get vaccinated, and in return the employer can receive a tax credit equal to the wages paid to employees for that day. The credit covers up to $511 per day for each vaccinated employee.

The concept of the credit is a product of recent research performed by the Society for Human Resource Management (SHRM), who found if an employer offered up to $150, eleven percent of employed Americans say they would consider getting the COVID-19 vaccine.  Another 21 percent said they would consider the vaccine if their employer offered more than $150. Additionally, Biden Administration officials referred to polling that showed employees would be more willing to get vaccinated if their employers provided access to a shot.

A recent White House press statement states, “Providing paid time off for vaccinations is an investment in the safety, productivity, and health of an employer’s own workforce and their community. The paid-leave tax credit that President Biden signed into the law in the American Rescue Plan ensures that no small business or nonprofits will lose a single dollar by providing such paid leave to workers receiving a vaccination.” Additionally, the Internal Revenue Service issued a fact sheet detailing to employers how to claim the credit on their quarterly tax filings. Approximately half of all private-sector employees in the United States will be eligible for the credit.

The tax credit serves as a way for small businesses to keep their businesses going during these unprecedented times due to the COVID-19 pandemic while simultaneously providing a way to look after the health and wellbeing of their employees. Additionally, it serves as a call for employers to take action to help get their employees and communities vaccinated in order to combat the COVID-19 pandemic.

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If you have any questions about tax credits or would like tax preparation assistance, please contact our tax professionals at The Innovative CPA Group at 203-489-0612 or via our contact form.