Senate bill gives payroll tax relief to some small businesses

The Restaurant Activation Tax Credit Act has been reintroduced to provide payroll tax relief for eligible small businesses.

Senate bill gives payroll tax relief to some small businesses

The new law creates a special tax credit available to businesses that previously applied to the Small Business Administration’s Restaurant Acceleration Fund (RRF) program but didn’t receive the grant because the program ran out of money. It is estimated that nearly two of her three of her eligible RRF applicants did not receive assistance, which equates to approximately 175,000 businesses.

Business eligible for the new tax credit

Credits available through the Restaurant Activation Tax Credit are available only to businesses that are eligible to apply for and receive RRF grants. Eligible employers are required to offset up to $25,000 in payroll taxes each quarter in calendar year 2023.

Additionally, credits are refundable up to $25,000 total annually for businesses with 10 or fewer employees, and the reimbursement cap is being phased out for businesses with fewer than 20 employees.

Restaurant business ‘suffering for too long’

Senator Ben Cardin led the reintroduction of the bill, saying: They have suffered for too long. The Restaurant Revitalization Fund was a timely program and did not have enough funding to meet the intense demand.

“We hear from many restaurant owners who missed out on these funds, using their personal retirement savings or pledging their homes to keep their businesses running. It will help us support the restaurants we love while contributing to the local economy.”

Additional Eligibility Criteria

Eligible companies must have experienced an average operating loss of at least 30% in both 2020 and 2021 compared to 2019. Or must have experienced a loss of at least 50% in the 2020 or 2021 calendar year compared to 2019.

To qualify, businesses must have been in operation before March 14, 2020 and have paid payroll taxes for at least two quarters of 2021.

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