Small businesses across America have felt the impact of the coronavirus pandemic more than any other sector, with many facing massive drops in revenue and imminent closure. To help provide some much-needed relief, a bill is making its way through the Senate that could provide many of these businesses with a significant amount of payroll tax relief.
Details of the Bill
The bill, which was introduced by Senate Majority Leader Mitch McConnell, would provide a temporary payroll tax reprieve for certain small businesses that are struggling. It would provide a 50 percent tax credit for businesses with fewer than 500 employees on wages up to $10,000 per employee.
The bill would also allow businesses to defer their payroll taxes until the end of 2021, or until the pandemic is over, whichever comes first.
Who Is Eligible?
The bill is aimed mainly at helping small businesses who have suffered as a result of the pandemic. To be eligible, businesses must have suffered a drop in revenue of more than 20 percent in the same quarter of the previous year.
What Are the Benefits?
The key benefit of the bill is that it would provide a much needed financial injection to small businesses. Payroll taxes can be a significant cost for businesses, so this would provide some welcome relief.
It would also provide businesses with a breathing space to survive the pandemic. By deferring the taxes, it would give businesses more time to make up the deficit or make other changes to stay afloat.
What Happens Next?
The bill is still making its way through the Senate and must pass before it can become law. If it is passed, it will be up to the Internal Revenue Service to implement the bill and make the necessary changes.
Key Takeaways
- The bill would provide a 50 percent tax credit for businesses with fewer than 500 employees on wages up to $10,000 per employee.
- Businesses must have suffered a drop in revenue of more than 20 percent in the same quarter of the previous year to be eligible.
- The bill would provide a much needed financial injection to small businesses as well as a breathing space to survive the pandemic.
- The bill is still making its way through the Senate and must pass before it can become law.
The coronavirus pandemic has been devastating for small businesses, so any relief offered is a welcome reprieve. While passing the bill is still uncertain, it is a positive sign that some progress is being made towards providing desperately needed help.
