TAX PROVISION

Employment Credits Extended

Using Tax Policy to Stimulate the Economy | March 2021

The credit for employee retention enacted under the CARES Act has been extended under the ARPA until the end of 2021. The qualifications for the credit have not changed but the reduction in payroll taxes has been expanded to include the Medicare tax.

The ARPA also extends the period for credits for paid sick leave and paid family leave to employers for COVID-19 related absences originally granted in the Families First Coronavirus Response Act. The fully refundable credits offset payroll taxes related to the compensation for the leaves. The limit on the credit for paid family leave has been increased to $12,000.

As part of the extension of the credits, paid time away from work related to vaccination now qualifies. The number of days taken into account for paid sick leave will reset after March 31. In addition, the number of days self-employed individuals can qualify for family leave has been increased from 50 to 60.