Payroll tax credits for vaccines: IRS issues new guidance
Under the American Rescue Plan Act, employers with 500 or fewer employees can receive payroll tax credits for paid time off they give their people to either get the COVID-19 vaccine or recover from it.
Now IRS has clarified how you can take advantage. It just issued a new fact sheet to help employers understand the logistics of these new credits.
Here’s what you need to know.
Claiming the tax credits for vaccines
You can claim the credits for wages paid during the period from April 1, 2021, through Sept. 30, 2021, if you pay sick and family leave during that time.
And if you expect to claim the payroll tax credits on your Form 941, here’s how to do it. You can simply keep the federal employment taxes you otherwise would’ve deposited equal to the amount of the credit. That includes:
- federal income tax withheld from employees
- employees’ share of social security and Medicare taxes, and
- your company’s share of social security and Medicare taxes.
Should you not have enough federal employment taxes on deposit to cover the amount of your anticipated credits, you can request an advance by filing Form 7200, Advance Payment of Employer Credits Due to COVID-19.
- Share on
Free Training & Resources
White Papers
Provided by Personify Health
Webinars
Provided by SkyStem
Further Reading
It’s no surprise that a medical expense like a dental exam can be paid or reimbursed under an HSA, but what did IRS recently say abou...
The minimum wage for certain federal contractors increased to $13.65 per hour on May 11, 2026. The tipped cash wage rose to $9.55. Here are...
Payroll teams that pay nonexempt workers nondiscretionary bonuses should confirm those amounts are included in the overtime regular rate. ...
One-week paycheck delays would leave nearly eight in 10 U.S. workers scrambling to cover bills, according to PayrollOrg’s 2025 Getting Pa...
Late payroll-tax deposits will be more expensive, effective July 1. The IRS set the interest rate on tax underpayments at 7% for Q3, up ...
Does a 30-minute unpaid meal break still qualify under the FLSA if employees can barely leave the building? A new DOL opinion letter says y...
