Small business franchises could benefit from tax credit programs

U.S. Treasury

U.S. Government offers employers a tax credit to cover workers’ time off to help their families with Covid vaccination

The Treasury Department and the Internal Revenue Service have announced expanded benefits relating to Covid-19 vaccinations. Small businesses with fewer than 500 employees are now entitled to tax credits equal to the wages they paid for giving paid time off to employees to take a family or household member to get vaccinated. This same tax credit also is offered if an employee needs time off to care for family or household members because they have suffered side effects after being vaccinated. 

In April the Treasury and IRS had stated that eligible employers could receive paid leave tax credits available under the American Rescue Plan Act of 2021 for providing leave for all employees who received the vaccine and for any time that they needed to recover from the vaccine. The expansion of that benefit, which occurred in late July, provides employers with additional ways to improve the health and safety of their employees’ families and their communities with this new assistance, according to the new announcement by the federal government. 

The ARP tax credits are available to eligible employers for paid vaccine-related sick leave and family leave taken starting April 1, 2021, and ending Sept. 30, 2021. Eligible employers may claim tax credits for wages paid for leave taken by employees who are not able to work or telework because they needed time off the job to be vaccinated or to recover from any injury, disability, illness or condition related to the vaccinations. It covers 100 percent of an employee’s pay (up to two weeks’ wages or 80 hours) and is limited to $511 per day and $5,110 total. 

The paid leave credits are tax credits against the employer’s share of the Medicare tax. For more information visit the IRS website.   

The federal government also has announced a continuing federal benefit for small businesses: The American Rescue Plan extends the Employee Retention Credit through Dec. 31.

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