How COVID-19 Vaccine Tax Credit Expansions Can Encourage More Vaccinations

In July 2021, the Biden Administration implemented changes to its COVID-19 relief programs designed to help small businesses recover from the impact of the pandemic. One significant change is the expansion of an existing COVID-19 vaccine tax credit where employers can be reimbursed for paid time off given to employees who miss work for vaccine-related reasons, including receiving and recovering from the vaccine, accompanying a family member to get vaccinated or taking care of a recovering family member. The Small Business Administration (SBA) also streamlines loan forgiveness through the Paycheck Protection Program (PPP).

In a recent CO— Small Business Update moderated by Jeanette Mulvey, editor in chief of CO— by the U.S. Chamber of Commerce, Tom West, deputy assistant secretary at the U.S. Treasury Department’s Office of Tax Policy and Neil Bradley, EVP and chief policy officer at U.S. Chamber of Commerce, shared insights on these new COVID-19 vaccine tax credit expansions and other relief programs for small employers.

The COVID-19 Vaccine Tax Credit Now Covers Time Off Taken by Employees to Care for Families

In March 2020, the CARES Act allowed businesses that provided COVID-19-related time off to employees to care for themselves or a family member to claim a tax credit. The Biden Administration’s American Rescue Plan (ARP) Act of March 2021 expanded this paid leave credit to cover vaccine-related time off.

“Under the American Rescue Plan, the expanded paid leave credit is available for small employers, generally [meaning] employers with 500 or fewer employees,” explained West. “Those smaller and medium-sized businesses are eligible for this tax credit for time that they give employees to recover from COVID. [It also covers] employees who are going to get vaccinated, or who get vaccinated and have some after-effects,” continued West.

“The credit means that for up to 80 hours of time that you give an employee if the employee is sick or getting vaccinated, the employer can recover dollar for dollar up to $500 per day,” West continued. “So that's up to $5,000 that an employer can get in tax credits for giving their employee time off for one of those specified reasons. The expansion that the administration put out last week was to cover… if you are taking a family member, a child, somebody else who lives in your household to get a vaccination. That is now a category for which an employer can give you paid time off and get a tax credit.”

SBA Is Streamlining Loan Forgiveness

The Paycheck Protection Program (PPP) is another significant COVID-19 relief program that has helped small businesses stay afloat through the pandemic. For PPP loans under $150,000, the SBA has recently launched a portal for employers to apply for loan forgiveness directly.

“The lender who originated your loan has to agree to participate in that program,” Bradley explained. “If your lender is listed [in the portal], you can apply through that portal on the SBA website — you no longer have to go through your lender.”

The SBA also implemented the Revenue Reduction Score for businesses with loans of $150,000 or less. Instead of providing paperwork if your business received a 25% or greater reduction in revenue compared to a previous quarter, the process requires businesses to enter their information into the program.

“It’s kind of like [going] to the EZ Pass lane,” Bradley said. “If it says you’re approved, you don’t have to go back and get all of this extra paperwork.”

Small Businesses Must Communicate to Encourage Employee Vaccination

Many businesses are deciding whether or not to mandate COVID-19 vaccination while finding ways to encourage employees to get vaccinated.

“We've seen employers provide paid time off for people to get vaccinated,” explained Bradley. “We've seen employers provide cash incentives… for employees who get vaccinated [and] some employers are providing additional days off.”

Mulvey noted that this is even more difficult for small businesses.

“I think it's a much harder decision for a small business to make, just because it’s a tough time to hire as it is,” she said. “You don’t want to do anything to put the employees you have in jeopardy in terms of losing them.”

“Businesses ... are trying to get a sense of where their employees are,” added Bradley. “Knowing where you stand on that kind of thing can give you some sense of [whether you are] likely to get to an appropriate threshold.”