American Rescue Plan Extends Tax Credits for Sick and Family Leave
Background: The Families First Coronavirus Response Act (FFCRA) was effective from April 1, 2020, through December 31, 2020. The FFCRA required employers of public and private companies under 500 employees to comply with the provisions set forth for six qualifying reasons of leave. Although the FFCRA expired on December 31, 2020, the tax credit was extended through March 31, 2021, for employers that voluntarily provided this leave to employees. 

The American Rescue Plan, signed into law by President Biden, extends the tax credits for COVID-19 Sick Leave pay and Expanded Family Leave pay through September 30, 2021, for employers that voluntarily provide this leave to employees. The following additional provisions, as outlined in the American Rescue Plan, apply to wages beginning on April 1, 2021, and through September 30, 2021:

  • Resets the 10 days of emergency sick leave pay available for an employee with an applicable qualifying reason
  • Adds additional qualifying reasons for leave:
  • Is obtaining an immunization related to COVID-19
  • Is recovering from any injury, disability, illness, or condition related to a COVID-19 vaccine
  • Increases the number of qualified paid leave days for a self-employed individual from 50 days to 60 days
  • Removes the two-week waiting period on Emergency Family Medical Leave, thereby increasing the aggregate cap from $10,000 to $12,000 per employee
  • Non-discrimination requirement disallows the tax credit for an employer who discriminates with respect to leave: In favor of highly compensated employees; in favor of full-time employees; or on the basis of tenure with the employer
Stay tuned as further guidance will be issued by the Department of Labor regarding these changes. Contact your ACT client service representative or email us at info@actcpas.com.