Paid Leave Tax Credit Extended for Small Businesses

Source: Office of Rep. Carbajal

Today, Rep. Carbajal announced that the IRS will continue to provide tax credits to help local small businesses cover the costs of providing paid sick and family leave for workers through September. Along with using the leave to care for themselves and family who are sick, workers can also use leave to get their COVID vaccinations and take time off to recover from any temporary side effects from the shot. Research has shown that states where employees gained access to paid sick leave through this tax credit experienced a slow-down in the spread of COVID.

“Small businesses are the backbone of our economy and they were hit especially hard by the pandemic. This assistance will allow them to continue operations while prioritizing their workers’ health and safety,” said Rep. Carbajal. “This is one component of the American Rescue Plan that will help our community crush the virus, by allowing workers the time needed to get vaccinated or care for their health while also supporting employers who want to keep their workers and customers safe.”

Thanks to the American Rescue Plan, which Rep. Carbajal voted for, employers with fewer than 500 employees may receive up to $17,110 per employee to provide workers with up to 10 days of paid sick leave and up to 12 weeks of paid family leave through September 30, 2021. Certain self-employed individuals in similar circumstances are entitled to similar credits as are schools, public hospitals, and other state and local government employers.  

Roughly 6 million businesses and more than 30 million workers are eligible for this credit. Businesses can access the advanceable, refundable tax credit in real-time by reducing the amount they set-aside to pay payroll taxes and employee withholding. Employers can then claim any excess on their quarterly tax filings or request an advance payment from the IRS.

Businesses can find instructions for how to claim their credit HERE.