COVID-19 FAQs

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FAMILIES FIRST HR 6201 - TAX CREDITS FOR PAID SICK, FAMILY AND MEDICAL LEAVE

Section 7001 of the Act allows a credit against payroll taxes for 100% of the employer-paid qualified sick leave wages paid each calendar quarter, subject to specified limitation. The amount of sick leave wages taken into account for purposes of the credit may not exceed $200 for any employee ($511 per day employees as defined under the Emergency Paid Sick Leave Act) and the aggregate number of days taken into account is limited to 10 over the number of days taken into account for preceding calendar quarters.

Section 7002 of the Act allows a refundable income tax credit for 100% of sick leave amounts of self-employed individuals under the Emergency Paid Sick Leave Act. For other employees, the credit percentage is 67.

Section 7003 of the Act allows an employer a 100% payroll tax credit for qualified family leave wages paid by such employer for each calendar quarter. The amount of qualified family leave wages that may be considered for each employee is limited to $200 per day and $10,000 for all calendar quarters.

Section 7004 of the Act allows a refundable income tax credit for 100% of the qualified family leave amounts of self-employed individuals, subject to a specified formula for determining the leave amounts.

Section 7005 of the Act provides that wages required to be paid to employees under the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act shall not be considered wages for purposes of the Federal Insurance Contributions Act (FICA). Transfers to specified Social Security trust funds are authorized to cover reductions in revenues.

The tax credit applies only to paid wages beginning on the effective date of the law (15 days after its enactment) and will expire on December 31, 2020. The Internal Revenue Service (IRS) is expressly empowered to issue additional guidance implementing these changes, and the bill includes additional funding reserved to the IRS for this purpose.

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