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Families First Coronavirus Response Act (FFCRA) Guidance

FPP F.041

Taxability

Paid emergency sick leave and paid family medical leave wages under these provisions are taxable income to the employees and are subject to federal income tax withholding as well as the employees’ share of payroll taxes under the Federal Insurance Contribution Act (FICA). However, before March 31, 2021, employers were not required to make the 6.2 percent contribution on these wages for the employer portion of Social Security under the FICA, although they had to make the required 1.45 percent contribution for the hospital insurance tax. Additionally, public employers were excluded from the provisions of the bill that provided tax credits for wages required by the FFCRA.

The provisions exempting wages paid in accordance with the EPSLA and E-FMLA from the employer’s share of Social Security under the FICA expired on March 31, 2021. Beginning April 1, 2021, employers are required to make the 6.2 percent contribution on these wages for the employer portion of Social Security under the FICA, in addition to the required 1.45 percent contribution for the hospital insurance tax.

The ARP provisions do not expressly exclude public employers from the provisions of the bill that provide tax credits for wages paid in accordance with the FFCRA for leave taken between April 1 and Sept. 30, 2021. An agency or institution that voluntarily offers paid leave in accordance with the FFCRA, as amended by the ARP, may be eligible to claim payroll tax credits to recoup the costs of providing the leave if it is determined to be an eligible employer.