American Rescue Plan Act Extends Employer Tax Credits, Doesn’t Require Leave

American Rescue Plan ActThe American Rescue Plan Act (ARPA) does not require Families First Coronavirus Response Act (FFCRA) paid and emergency family leave, but does extend and expand the tax credits for employers. ARPA extends these tax credits through September 30, 2021.

The FFCRA had two major provisions: the Emergency Paid Sick Leave (EPSL) Act and the Emergency Family and Medical Leave (EFML) Expansion Act. Under the EPSL Act, private employers with fewer than 500 employees and some public employers had to pay sick leave of up to 80 hours to employees who needed to take leave for certain coronavirus-related reasons. Under the EFML Expansion Act, employees were eligible for an additional 10 weeks of family leave paid at two-thirds of their regular wages to care for a child whose school or place of care is closed or whose child care provider is unavailable because of COVID-19.

Under ARPA, tax credits continue to be available for paid sick leave and paid family leave. The new law expanded leave to include additional reasons:

  • The worker is getting a COVID-19 vaccine.
  • The employee is recovering from complications due to receiving the vaccine.
  • The worker is awaiting the results of a COVID-19 test or diagnosis for coronavirus.
  • ARPA also resets the 10-day limit for the tax credit for paid sick leave under FFCRA as of April 1, 2021. Any days an employee took before that date will not count toward the cap following that date.

ARPA extends the employee retention credit established under the Coronavirus Aid, Relief, and Economic Security (CARES) Act through the end of the year. It also expands eligibility for the employee retention credit to new startups that were established after February 15, 2020, and to companies if their revenue declined by 90 percent compared to the same calendar quarter of the previous year. The credit is capped at $50,000 per calendar quarter for startups.

KRS professionals are available to provide guidance on tax credits and assist with loan and grant applications. Please contact us if you have any questions, concerns, or need advisement during this unprecedented time. Visit the KRS Coronavirus Resources Page for additional information.