Federal COVID-19 Relief Bill Includes Employer Tax Credit
Published on by Scott Cress in COVID-19, Tax Services
On the morning of March 14, 2020, the U.S. House of Representatives passed emergency legislation to provide support for families and businesses impacted by the COVID-19 virus. The bill will move on to the Senate where it is expected to pass and the President is also expected to sign. H.R. 6201 is the second bill that lawmakers have passed this month to provide economic support, and it is reported that the House is working on a third emergency response package.
Major provisions of the bill include:
- Two weeks of paid emergency sick leave at 100% of regular pay (part-time employees are entitled to the typical number of hours that they work in a typical two-week period)
- 90 days of paid family and medical leave at not less than two-thirds the regular pay rate
- Enhanced unemployment insurance for workers who lose their jobs due to the outbreak
- Enhancements to SNAP, student/senior meals and support for food banks
- Increased funding to Medicaid
The legislation provides employers with a refundable tax credit to offset the cost of providing employees paid sick leave wages. The tax credit is allowed against the employer portion of Social Security taxes. The amount of the credit is capped between $200 – $511 per employee per day depending on the circumstances of the leave:
For employees who must self-isolate, obtain a diagnosis, or comply with a self-isolation recommendation with respect to the virus, wages taken into account for each employee are capped at $511 per day.
For employees caring for a family member or for a child whose school or place of care has been closed, wages taken into account for each employee are capped at $200 per day.
Eligible self-employed individuals who must self-isolate, obtain a diagnosis, or comply with a self-isolation recommendation with respect to coronavirus are provided a refundable tax credit equal to 100% of a qualified sick leave equivalent amount. For eligible self-employed individuals caring for a family member or for a child whose school or place of care has been closed due to coronavirus, section 7002 of the bill provides a refundable tax credit equal to 67% of a qualified sick leave equivalent amount.
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