Below is a summary of the tax provisions of interest included in the series of coronavirus-related bills:
- Rebate (Section 201 and 202): As under the CARES Act, $1,200 per individual and $2,400 per married couple with $500 per dependent, who can be of any age rather than under 17 as was the case under the CARES Act. The rebate phases out for individuals with over $99,000 in adjusted gross income and for married filers with over $198,000 in adjusted gross income.
- Enhanced Employee Hiring and Retention Payroll Tax Credit (Section 211): The applicable percentage of qualified wages subject to the credit is increased from 50 percent to 65 percent. The amount of qualified wages subject to the credit is increased from $10,000 per year per employee to $10,000 per quarter per employee, limited to $30,000 for the calendar year. Under the CARES Act, for employers with more than 100 full-time employees, the credit is based only on the portion of an employee’s wages that compensate the employee for not performing services. That threshold is increased to 500 full-time employees. The reduction in gross receipts required to qualify as an eligible employer is reduced from a 50-percent decline to a 25-percent decline compared to the same calendar quarter in the prior year.
- Temporary Expansion of Work Opportunity Tax Credit (Section 212): A new WOTC targeted group is added: 2020 qualified COVID-19 unemployment recipients.
- Safe and Healthy Workplace Tax Credit (Section 213): A refundable payroll tax credit of 50 percent of an employer’s “qualified employee protection expenses” is established, covering, among other things, testing for COVID-19, protective personal equipment, cleaning supplies and “qualified workplace reconfiguration expenses”, which includes “qualified workplace technology expenses.” In each calendar quarter, qualified expenses cannot exceed a cap based on an employer’s average number of employees. The cap is equal to $1,000 for each of the first 500 employees plus $750 for each employee between 500 and 1,000 plus $500 for each employee that exceeds 1,000.
- State Tax Certainty for Employees and Employers (Section 403): The provision creates uniform procedures for assessing state and local income taxes on remote and mobile workers affected by changing work conditions during the pandemic. Through 2024, employees who perform employment duties in multiple states would be subject to income tax only in their state of residence and in any states in which they are present and performing employment duties for more than a limited time during the calendar year.
Legislative text can be found here.
For more information, please contact RILA Vice President of Tax Dave Koenig.