Under the Families First Coronavirus Response Act (FFCRA), employers with fewer than 500 employees were required to pay sick and FMLA leave for COVID-related absences from work for certain time periods. These payments were refunded to the employer through a payroll tax credit. The requirement to pay such leave expired on December 31, 2020, while the credit for making such payments has been extended to March 31, 2021. In addition, self-employed people using this credit can base the credit amount on prior-year net earnings from self-employment rather than the current year.
Since 2018, employers were able to claim an income tax credit of 12.5% – 25% of certain wages paid for up to 12 weeks of family medical leave. The amounts had to be paid under a written policy available on a nondiscriminatory basis to all employees employed for a year or more and earning less than a specified amount. This provision, which was scheduled to expire on December 31, 2020, has been extended to December 31, 2025.
