Tax News Update    Email this document    Print this document  

July 28, 2020
2020-1916

Pennsylvania hazard pay grants are taxable to employees but deductible to businesses

The Pennsylvania Department of Revenue explained in its COVID-19 news release  that the additional hazard pay employees receive from their employers through the state's hazard pay grant funding is wages subject to Pennsylvania state income tax and income tax withholding.

For Pennsylvania corporate income tax purposes, businesses are not required to include as income grants they receive through the state's hazard pay program; however, they may take a deduction for the hazard pay they provide to their employees.

Background

As previously reported (EY Tax Alert 2020-1881), the Department announced a COVID-19 hazard pay grant program to help employers provide hazard pay to employees in life-sustaining occupations during the COVID-19 emergency. Hazard pay means additional wages paid to employees for performing hazardous duty or work involving physical hardship in connection with COVID-19.

Employers may submit applications for the hazard pay grant of up to $1,200 per eligible full-time equivalent (FTE) employee. The hazard pay must be paid to the eligible employee over the 10-week period of August 16, 2020 through October 24, 2020 as a $3/hour hazard pay increase to their regular hourly pay rate.

Applications will be accepted between July 16, 2020, and July 31, 2020, leaving employers a short time to take advantage of this program.

———————————————

Contact Information
For additional information concerning this Alert, please contact:
 
Workforce Tax Services - Employment Tax Advisory Services
   • Kenneth Hausser (kenneth.hausser@ey.com)
   • Debera Salam (debera.salam@ey.com)
   • Kristie Lowery (kristie.lowery@ey.com)
   • Peter Berard (peter.berard@ey.com)

———————————————
ATTACHMENT

EY Payroll News Flash

 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 1996 – 2024, Ernst & Young LLP

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

EY US Tax News Update Master Agreement | EY Privacy Statement