Payroll Tax Credit for Required paid family leave

Updated March 25,2020

How sick leave and payroll tax credit rules work

Credit for Family Leave

• 100% of the “Qualified Family Leave” wages paid by the employer  

• Employer must have fewer than 500 employees  
• Provide leave when an employee is unable to work or telework due to a need to care for  

• a son or daughter under age 18 because the school or place of care has been closed, or the child care provider is unavailable 
• (Employers with fewer than 50 employees can be exempted from the requirement.) 

• Up to $200 per day (maximum of $10,000 per employee) 

• EMPLOYER IS TAXED ON THE CREDIT – meaning no tax deduction for the government-funded portion 

Payroll Tax Credit for Required Sick Leave 

• 100% of the “Qualified Sick Leave” wages paid by the employer 
• Employer must have fewer than 500 employees  

• Required to provide up to 80 hours of paid sick time 

• Employee is quarantined or self- quarantined, has the virus, or school has been closed 
• (Employers with fewer than 50 employees can be exempted from the requirement.) 

• Credit limits 

• Up to $522 in wages for quarantined or have the virus 

• Up to $200 for other reasons 

• EMPLOYER IS TAXED ON THE CREDIT – meaning no tax deduction for the government funded portion