Vaccination Tax Credit: What You Need to Know

The White House announced earlier this week that a tax credit would be available to small and mid-sized businesses to assist in getting the population vaccinated. NPMA staff participated in a small business call with White House and Treasury staff today, and top-line information on the credit is below.

What companies are eligible? Any company with 500 or less employees who offer paid leave to full and/or part time employees is eligible for this tax credit. The credit is only give between April 1 and September 30, 2021. Non-profits are eligible for this credit.

How much can an employer claim? Employers can receive a tax credit for up to 80 hours per employee, for one of two reasons:

1. An employer may receive up to $511 per day, per employee with a total cap per employee of $5,110 for time related to a sick quarantined employee, time for the employee to receive a vaccination or to recover from a vaccination, and time for an employee to receive a COVID test.

OR

2. This employer can receive two-thirds of the employees regular wage, capped at $200 per day for time the employee spent caring for someone in quarantining or to provide care due to COVID school or child care related closures.

How can a business claim this credit? The credit can be claimed on a quarterly basis as a credit against form 941. For advance payments, file form 7200.  Speak with your payroll provider for more information.

Are there any other limitations? Businesses can not double dip on this credit and PPP funding; if an organization has a PPP loan it can not double count employee hours for both PPP forgiveness and this credit. Both can be used, just not simultaneously.

Should I document this? Yes! Make sure to retain documentation noting the reason for providing leave for each employee.

Additional questions? The IRS has a help page available here for small and mid-sized employers.