New Tax Credit Rewards Paid Leave for COVID-19 Vaccinations

6 min read • Jun 14, 2021 • Joe Kukura

You may have heard that some states are giving out millions of dollars in “vaccine lotteries.” Ohio Governor Mike DeWine started these sweepstakes when he announced in early May that 5 vaccinated Ohioans would win $1 million apiece for getting the shot. New York, Maryland, and Kentucky quickly followed suit with their own form of vaccine lotteries, Fast Company reports. Then California Governor Gavin Newsom upped the ante by announcing that 10 vaccinated Californians would win $1.5 million apiece in that state’s vaccine lottery, in addition to a number of other cash prize vaccine awards. 

According to Vox, Ohio “saw a 47% increase in first shots among people 18 and older.” We don’t yet have data for the other states’ recently announced vaccine lotteries, but the Ohio results indicate that giving people money is a rather effective tactic for getting the population at large to get vaccinated.

Vaccine cash incentives are also available to your small business, though they probably won’t win you a million dollars, and the money comes in the form of tax cuts. President Biden recently announced a tax credit for businesses offering COVID-19 vaccine-related paid leave, CNBC reports.

“Every employee should get paid leave to get a shot, and businesses should know that they can provide it without a hit to their bottom line,” Biden said at a White House speech in late April. “There’s no excuse for not getting it done.”

Small businesses will get a tax cut for the equivalent of any amount of paid time off given to employees to get vaccinated or time off to recover from side effects. The tax credit is only available to small and medium-sized businesses. Let’s take a look at how this tax credit for paid vaccination time off works and whether your business is eligible for the tax credit.

How Does the Vaccination Tax Credit Work?

The dollar value of the tax credit is the equivalent to however much paid time off your business has given employees to get vaccinated or recover from the side effects of getting vaccinated. The tax break applies to any small or medium-size business (or nonprofit) with 500 employees or fewer.

According to a White House statement, the tax credit will match up to $511 per day provided to each employee for up to 5 days or 80 hours of paid time off total. The time off for vaccination must be taken between Apr. 1 and Sept. 30, 2021. 

Or as the White House announcement puts it, “The tax credit in the American Rescue Plan will enable employers with fewer than 500 employees to claim up to $17,110 for 14 weeks of paid leave for each impacted employee not only to get vaccinated but also to take time off if they have COVID-19 symptoms and are going to the doctor.”

The tax credit can also be applied to paid time off if the employee has COVID-19 or was “under quarantine or isolation order by the government or a doctor (or are caring for someone who is); or have to care for a child whose school or childcare provider closed.” 

The IRS has a fact sheet explaining how to claim the time off for vaccination tax credit.

There is no federal law saying that you have to give people paid time off to get vaccinated. According to ABC News, California and New York are the only states that require employers to give paid leave to get a vaccine shot. But the tax credit is a nice incentive, and giving people paid time off to get the shot will indeed help more people get vaccinated. 

Paid Time Off Will Get People Vaccinated

The White House cites a study from the medical journal Health Affairs that paid sick leave flattened the COVID-19 curve and that workers taking paid leave resulted in “400 fewer confirmed cases per state per day.” That study was conducted between March and May of 2020, prior to the vaccine’s arrival, but shows the power of paid time off in keeping workplaces safe

Many people who still haven’t been vaccinated have refrained from getting the shot for different reasons than you might think. It’s not so much that people are distrustful of the vaccine— it’s more that they’re having trouble scheduling an appointment or they feel they just don’t have time.

The behavioral and data science firm Surgo Ventures surveyed 17,000 people about when they plan to get vaccinated. They found the top 3 reasons among respondents who had not been vaccinated yet were as follows:

  1. Appointment availability
  2. Not having time to get the vaccine shot
  3. Concerns about the cost

Obviously, the availability of appointments differs by state and region, so there’s no one-size-fits-all solution to that. And since the vaccine is free of charge, the concerns about the cost could be addressed with a large-scale communications campaign. Neither of these problems is something your small business can solve.

But you can solve the problem of creating more time for your employees to get the vaccine by offering them paid time off and simply deducting that sum from your taxes.

Other Programs to Encourage Vaccination

The Biden administration is also encouraging American businesses to provide vaccine freebies and giveaways, though they are not providing any forms of tax credit or other bonuses for businesses that do so. Still, businesses across the country are offering vaccine promotions like bonus miles on airlines, free beers, and restaurant discounts, according to Vox.

After all, people may spend more and treat themselves in advance as they hope to win those million-dollar vaccine lotteries. Vaccine freebies are a great way to get customers in the door, and then you can upsell them to buy other items.

Despite the magnificent progress we’ve made on vaccinations, as of late May, still only about 40% of the country is fully vaccinated. Yes, there are encouraging signs the pandemic could be ending. But if we want the small business boom summer we’re all hoping for, we need to get as much of the country fully vaccinated as possible. And your small business can play a role in giving us a shot at that.

Joe Kukura

Joe Kukura is a San Francisco freelance writer whose work also appears in SF Weekly and SFist. He’s written financial advice for NerdWallet, tech industry analysis for the Daily Dot, sports content for NBC Bay Area, and good, old-fashioned clickbait for Thrillist.