President Biden Announces COVID-19 Tax Credits for Small Businesses

April 27, 2021


On April 21, 2021, President Biden announced a new program created by the newly-enacted American Rescue Plan to provide tax credits for small businesses and nonprofits that provide paid leave for their employees to get vaccinated. This incentive is the lastest in the Biden Administration's continued push to encourage employers across the United States to help their employees get vaccinated and prevent another surge in COVID-19 infections. 

Employers with fewer than 500 employees can claim tax credits for sick leave paid between April 1, 2021 and September 30, 2021 when the employee is:

Sick or quarantining;
Awaiting the results of a COVID-19 test;
Attending a vaccination appointment; or
Recovering from the side effects of vaccination.


Employers can claim up to $511 per day for up to 80 hours and a total of $5,110 per employee. 

Employers can also claim tax credit equivalent to two-thirds of the employee's regular wage, capped at $200 per day, up to a total of $2,000 per employee, if the employee takes leave to care for someone who is quarantining or to provide care to a child due to a COVID-19-related school or daycare closure. 

In coordination with the President's announcement, the IRS also published guidance to educate employers on how to claim this credit on their quarterly tax filings. A similar tax credit is also available for self-employed individuals. 

This program is voluntary for employers, and does not change earlier requirements regarding coronavirus-related leave. These tax credits can be used to offset leave-related costs incurred as part of an employer's vaccine incentive plan

The Biden Administration called this tax credit program an "important step in getting America's workforce vaccinated," which may assist employers and employees who may be reluctant to take leave time to attend a vaccine appointment or to recover from a vaccine's side effects. 

Please contact a member of our firm's Labor & Employment Law practice group for more information on how your organization can participate in this tax credit program. 


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