Payroll Taxes: An Overview of Taxes Imposed and Past Payroll Tax Relief

April 4, 2022 R47062

Payroll Taxes: An Overview of Taxes Imposed
April 4, 2022
and Past Payroll Tax Relief
Anthony A. Cilluffo
A payroll tax is generally a tax levied on the wages or earnings of workers. Federal payroll taxes
Analyst in Public Finance
are the second-largest federal revenue source, after individual income taxes, raising $1.3 trillion

(32% of federal revenue) in FY2021. The two largest payroll taxes fund parts of Social Security
Molly F. Sherlock
retirement, survivors, and disability insurance, as well as Medicare Part A (hospital insurance).
Specialist in Public Finance
Several smaller payroll taxes partially fund other programs, such as unemployment insurance and

retirement programs for special populations.
For a copy of the full report,
For most employees, the employee payroll tax of 6.2% for Social Security and 1.45% for
please call 7-5700 or visit
Medicare (a combined 7.65%) applies to the first dollar of wages. Employers pay an additional
www.crs.gov.
7.65% on wages paid for the same programs. The Social Security payroll tax applies to the first
$147,000 in wages paid to an individual in 2022, and is generally adjusted annually for growth in average wages. People who
are self-employed pay a combined rate of 15.3% of self-employment income in self-employment payroll taxes. For higher-
income individuals, an Additional Medicare Tax of 0.9% applies to wages and net self-employment earnings above fixed
thresholds that vary based on filing status. In addition, employers pay federal unemployment taxes on the first $7,000 in
wages paid to employees working in jobs covered by Unemployment Compensation.
Most taxpayers pay more payroll taxes than individual income tax. Estimates suggest that for 2021, 42.9% of taxpayers had a
positive federal income tax liability, while 75.2% had a positive payroll tax liability. Fewer taxpayers have a positive income
tax liability than is typical, due to Coronavirus Disease 2019 (COVID-19) pandemic-related income tax relief. Even so, it is
often the case that lower- and moderate-income households pay more in payroll taxes than in income taxes.
For most taxpayers, payroll tax burdens are proportional to earnings. Toward the top of the income distribution, payroll taxes
are regressive, meaning that as taxpayers’ incomes increase, the share of income paid in payroll taxes decreases. However,
the programs that payroll taxes fund are generally considered to be progressive—that is, their benefit formulas are designed
to replace a larger share of earnings for lower-wage workers.
Recent Congresses provided relief to individuals and businesses using the payroll tax system. During the 111th and 112th
Congresses, certain payroll taxes were temporarily suspended in response to the Great Recession for employers who hired
certain new employees, mostly people who were previously unemployed. Additionally, an employee payroll tax holiday
temporarily reduced the tax rates for the employee portion of Social Security taxes.
In response to the COVID-19 pandemic, the 116th and 117th Congresses used payroll tax credits and deferrals to provide
relief. Paid leave payroll tax credits provided relief to smaller employers required to provide paid sick and family leave to
address the effects of COVID-19. The Employee Retention Credit provided a refundable and advanceable payroll tax credit
for employers who kept employees on their payrolls during COVID-19. Payroll tax deferrals were also available, one for
employers and another for employees.

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Payroll Taxes: An Overview of Taxes Imposed and Past Payroll Tax Relief

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he first federal payroll taxes for Social Security and Unemployment Compensation (UC)
were created by the Social Security Act of 1935. Since then, with the addition of new
T payroll taxes, the increase in the number of workers subject to such taxes, and increases in
tax rates, payroll taxes have grown to become the federal government’s second-largest revenue
source.
This report provides an overview of the federal payroll tax system, including details about each of
the major payroll taxes. Recent Congresses have used the payroll tax system to provide relief in
response to economic downturns. Temporary changes to payroll tax policy were used in response
to the Great Recession (2007-2009) and the Coronavirus Disease 2019 (COVID-19) pandemic.
The report provides an overview of these temporary forms of payroll tax relief.
Payroll Taxes
What Are Payroll Taxes?
A payroll tax is generally a tax levied on the wages or earnings of workers. In the United States,
payroll taxes are a set of taxes levied to fund social insurance programs. Programs funded by
payroll taxes include Social Security retirement and survivor’s benefits, disability insurance,
Medicare Part A (hospital benefit), and unemployment insurance.1
There are several key differences between payroll taxes and the individual income tax. Generally,
payroll taxes are simpler than the individual income tax. Payroll taxes apply one tax rate and only
to wages, with no deductions and limited credits, and do not differ by the worker’s marital status
or family structure. (The additional Medicare tax differs slightly from this pattern, as detailed
below.) In contrast, the individual income tax has a graduated rate structure, taxes different forms
of income (capital gains, interest, and rents, for example, in addition to wages), allows for various
credits and deductions, and differs by marital status and family structure.
How Much Revenue Is Raised From Payroll Taxes?
The federal government received $1.3 trillion in payroll tax revenue in FY2021.2 The amount of
revenue received from payroll taxes has generally increased over time since the first payroll taxes
were introduced in the 1930s (Figure 1). This is due to new payroll taxes being introduced (such
as the Medicare tax in 1966), the U.S. labor force expanding over the period (leading to more
taxable wages), and increases in payroll tax rates (see Figure 6, below).
An exception to the trend of increasing payroll tax collections occurred from FY2009 through
FY2011. The decline in payroll tax receipts during this time period had two major causes. First,
the historically high unemployment during and following the economic recession of 2007-2009
(popularly known as the Great Recession) reduced the amount of wages subject to payroll taxes
as workers were out of work, reducing collections. Second, the federal government used payroll

1 Payroll taxes have also been considered as an option for funding proposed new entitlement programs, such as a
program for paid family and medical leave. For background, see CRS Report R46390, Paid Family and Medical Leave:
Current Policy and Legislative Proposals in the 116th Congress, by Molly F. Sherlock, Barry F. Huston, and Sarah A.
Donovan.
2 This figure is the total amount collected and reported by the Office of Management and Budget (OMB) for social
insurance and retirement receipts. For simplicity, this report refers to this category of revenues as payroll tax receipts,
although the category does include some sources of revenue that are not strictly federal payroll taxes.
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Payroll Taxes: An Overview of Taxes Imposed and Past Payroll Tax Relief

tax cuts to stimulate the economy (see “Great Recession Payroll Tax Relief”), resulting in lower
payroll tax collections.
Figure 1. Federal Payroll Tax Collections, FY1940 to FY2021
Billions of nominal or constant (FY2021) dollars

Source: Figure created by CRS using data from Office of Management and Budget, Historical Tables 2.1 and
10.1, available at https://www.whitehouse.gov/omb/historical-tables/. Total social insurance and retirement
receipts include Social Security and Medicare payrol taxes, Railroad retirement and Railroad Social Security
equivalents, unemployment insurance receipts, and other retirement receipts, as detailed in Table 2.4.
Notes: Data labels shown for FY1940 and FY2021 in FY2021 dol ars.
While payroll tax revenues have increased over the longer term, payroll tax revenues relative to
the size of the economy (as a share of U.S. Gross Domestic Product [GDP]) stopped trending
upward around 1980 (Figure 2). Since 1980, payroll taxes have been between 5.7% and 6.6% of
GDP, with the exception of FY2011 and FY2012, when payroll tax receipts were 5.3% of GDP
(again, this is primarily due to payroll tax relief policies; see “Great Recession Payroll Tax
Relief”).
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Figure 2. Federal Payroll Tax Receipts as a Share of Gross Domestic Product (GDP),
FY1940 to FY2021

Source: Figure created by CRS using data from Office of Management and Budget, Historical Table 2.3, available
at https://www.whitehouse.gov/omb/historical-tables/.
Notes: Data labels are shown for FY1940, FY2001, and FY2021.
In FY2021, payroll taxes accounted for 32.5% of federal revenue (Figure 3). Payroll taxes in
FY2021 were the second-largest source of federal revenues (after the individual income tax). In
FY1945, following the World War II-era expansion of the individual income tax, payroll taxes
were 7.6% of federal revenues. The fluctuations in payroll taxes as a share of federal revenues
since the 2000s are driven more by changes in income tax revenues than changes in payroll tax
revenues. In the early 2000s and again during the Great Recession, income tax revenues declined
substantially, while payroll tax receipts were either stable or fell by a smaller amount. As a result,
the share of tax revenue coming from payroll taxes increased.
Figure 3. Federal Payroll Taxes as a Share of Federal Revenues, FY1940 to FY2021

Source: Figure created by CRS using data from Office of Management and Budget, Historical Table 2.2, available
at https://www.whitehouse.gov/omb/historical-tables/.
Notes: Data labels are shown for FY1940, FY1945, FY2009, and FY2021.
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Distribution of Payroll Tax Burden
For most taxpayers, payroll tax burdens are proportional to earnings. Toward the top of the
income distribution, payroll taxes are regressive, meaning that as taxpayers’ incomes increase, the
share of income paid in payroll taxes decreases. Figure 4 shows that, in 2018 (the most recent
year available), households in the lowest quintile (earning an average of $22,500) paid 9.5% of
their income in payroll taxes, whereas households in the highest quartile (earning an average of
$321,700) paid 6.4% of their income in payroll taxes.3
Structural elements of payroll taxes contribute to high-income taxpayers paying a lower
percentage of their income in payroll taxes. The Social Security payroll tax applies at a flat rate.
However, earnings above a certain level ($147,000 in 2022) are not subject to the Social Security
payroll tax. The level of maximum taxable wages is adjusted annually for wage growth. This
feature of the tax lowers the average tax rate for higher earners. Also, payroll taxes are generally
only levied on wage income. Taxpayers with higher income are more likely to have income that is
not subject to payroll taxes, such as income from capital gains, interest, or rent.
Figure 4. Average Federal Payroll Tax Rates by Income Group, 2018
Federal payroll taxes as a share of household income before taxes and transfers

Source: Figure created by CRS using data from Congressional Budget Office, “The Distribution of Household
Income, 2018,” (published August 4, 2021), available at https://www.cbo.gov/publication/57061.
Notes: Income groups are created by ranking households by income before taxes and transfers, after adjusting
for household size. Income includes labor, business, capital, retirement, and other sources of income, as well as
the employer portion of payrol taxes. It also includes social insurance benefits, such as Social Security, Medicare,
unemployment insurance, and worker’s compensation benefits.
Federal payroll taxes are generally structured so that they are imposed on both the employee and
employer (as discussed below under “The Different Types of Payroll Taxes”). Economists often
assume that workers effectively pay both the employee and employer portions of payroll taxes.4 A

3 Congressional Budget Office, The Distribution of Household Income, 2018, supplemental data tables 3 and 9
(published August 4, 2021), at https://www.cbo.gov/publication/57061.
4 While payroll taxes are statutorily imposed on both employers and employees, the tax burden is often believed to fall
on workers, as the employer’s share of payroll taxes is passed on to employees via lower wages. Economic theory
provides that employees would be expected to bear the payroll tax burden when labor supply is much less elastic than
labor demand. There are situations, however, where payroll taxes may not be fully borne by employees, particularly in
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worker’s paycheck only shows withholding for the employee portion. However, the employer
portion of payroll taxes is part of an employer’s total labor cost. Many economists believe that an
employee’s wages are reduced by the amount of the employer’s portion of payroll taxes.
Following this logic, the Congressional Budget Office (CBO) and Joint Committee on Taxation
(JCT) generally assume that workers effectively pay both the employee (from a deduction from
their paycheck) and employer (through lower wages) portions of payroll taxes.5
Most taxpayers pay more in payroll taxes than they do in individual income taxes. In 2021, an
estimated 42.9% of taxpayers had a positive federal income tax liability, while an estimated
75.2% had a positive payroll tax liability.6 Overall, an estimated 63.9% of taxpayers were
expected to pay more in payroll taxes than income taxes (a figure that increases to 79.1% when
looking only at taxpayers that had either a positive payroll or income tax liability). Figure 5
shows the share of taxpayers with either positive payroll or positive income tax liability across
the income distribution. For taxpayers in the lowest income quintile (income below $27,900),
55.8% had positive payroll tax liability, while 0.1% had a positive income tax liability.7 Lower-
and moderate-income taxpayers may have a negative income tax liability, as refundable tax
credits like the Earned Income Tax Credit (EITC) and child tax credit can result in negative
income tax liabilities.8 Given the EITC’s explicit link to work, it can be viewed as offsetting all or
part of payroll and other tax liabilities for low- to moderate-income taxpayers.
Moving up the income distribution, a larger share of taxpayers have positive payroll tax and
income tax liabilities. In the fourth income quintile (incomes from $97,700 to $178,100), 87.5%
of taxpayers had positive payroll tax liability and 75.1% had positive income tax liability. Most
taxpayers in this income group had a payroll tax liability that exceeded income tax liability
(71.5%).9 At the upper end of the income distribution, taxpayers are most likely to pay both
payroll taxes and income taxes, although they are less likely to have payroll tax liabilities that
exceed income tax liabilities.

the short run. For discussion, see Dorian Carloni, Revisiting the Extent to Which Payroll Taxes Are Passed Through to
Employees, Congressional Budget Office, Working Paper 2021-06, June 2021, at https://www.cbo.gov/system/files/
2021-06/57089-Payroll-Taxes.pdf.
5 “CBO also allocates the employer’s share of payroll taxes to employees because employers appear to pass on their
share of payroll taxes to employees by paying lower wages than they otherwise would.” Congressional Budget Office,
The Distribution of Household Income, 2018, August 4, 2021, p. 42, at https://www.cbo.gov/publication/57061.
Likewise, JCT lists payroll taxes as “attributed to employees,” for instance in footnote [3] of Table A-6 in Joint
Committee on Taxation, Overview of the Federal Tax System in Effect for 2021, April 15, 2021, p. 40, at
https://www.jct.gov/publications/2021/jcx-18-21/.
6 Tax Policy Center, “Distribution of Federal Payroll and Income Taxes by Expanded Cash Income Percentile, 2021,”
Table T21-0181, August 18, 2021, at https://www.taxpolicycenter.org/simulations/distribution-federal-payroll-and-
individual-income-taxes-august-2021. For more on the distinction between the federal income tax and payroll taxes, see
CRS Report R45145, Overview of the Federal Tax System in 2020, by Molly F. Sherlock and Donald J. Marples.
7 Tax units include filing and nonfiling units.
8 For more on the EITC, see CRS Report R43805, The Earned Income Tax Credit (EITC): How It Works and Who
Receives It, by Margot L. Crandall-Hollick, Gene Falk, and Conor F. Boyle. For more on the child tax credit, see CRS
Report R41873, The Child Tax Credit: How It Works and Who Receives It, by Margot L. Crandall-Hollick.
9 Payroll taxes include the employee and employer share of OASDI and Medicare (HI) taxes, self-employment taxes,
and the additional ACA HI tax. If only the employee share of payroll taxes were considered, fewer taxpayers would
have payroll tax liability that exceeds income tax liability. For example, for 2021 an estimated 48.8% of taxpayers in
the fourth income quintile had an employee share of payroll taxes that exceeded income tax liability.
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Figure 5. Share of Taxpayers with Positive Payroll and Income Tax Liability, by
Income Quintile, 2021

Source: CRS graphic using data from the Tax Policy Center.
Notes: The breaks are (in 2020 dol ars): 20% at $27,900; 40% at $55,100; 60% at $97,700; and 80% at $178,100.
Payrol taxes include the employee and employer share of OASDI and Medicare (HI) taxes, self-employment
taxes, and the additional ACA HI tax.
Although some payroll taxes are regressive, the programs they fund tend to be more progressive
than the taxes.10 The formula used to calculate Social Security’s primary insurance amount results
in a higher replacement ratio—the amount of pre-retirement earnings received in retirement—for
workers with relatively lower earnings.11 Likewise, eligibility for premium-free Medicare Part A
(hospital insurance) is linked with paying Medicare tax for 10 years—not the amount paid.12 A
worker with lower earnings will pay less tax over 10 years than a worker with higher earnings,
but both will be eligible for the same benefits.
The Different Types of Payroll Taxes
The term “payroll tax” refers collectively to a set of separate taxes.13 These taxes share broadly
similar structures and fund a set of social insurance programs. The revenue generated by each
payroll tax and the extent to which it satisfies its program’s funding needs varies. Most payroll
tax receipts (72.5% of the $1.3 trillion total) are from Social Security payroll taxes (Table 1).
These receipts are split between the old-age and survivor’s insurance (OASI) portion of Social
Security, which funds the program’s retirement and survivor benefits, and disability insurance

10 There may be exceptions to this generalization. For example, in the case of UI, if marginal or certain categories of
workers are less likely to receive UI than others, benefits may not be more progressive than the taxes. UI taxes, since
they only apply to the first $7,000 in wages, are regressive even at low and modest income levels.
11 For more on how Social Security benefits are calculated, see CRS In Focus IF11747, Social Security: Benefit
Calculation Overview, by Barry F. Huston.
12 For more on the Medicare program and eligibility requirements, see CRS In Focus IF10885, Medicare Overview, by
Patricia A. Davis and Phoenix Voorhies.
13 As noted in footnote 2, this report uses the term payroll tax when discussing aggregate social insurance and
retirement receipts.
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(DI).14 The next largest portion (22.4%) is from the Medicare tax that funds hospital insurance
(Medicare Part A). The Unemployment Insurance (UI) taxes and receipts account for 4.3% of
federal payroll tax receipts. The remaining revenues are other sources of retirement receipts from
relatively small programs, mostly supporting the retirements of railroad and federal government
workers.
Although payroll taxes are broadly similar, each has a different structure and legislative history,
as discussed in the following sections.
Table 1. Composition of Social Insurance and Retirement Receipts, FY2021
Percentage of Total
Payroll Tax or Revenue Source
FY2021 Receipts
Payroll Tax or
Retirement Receipts
Social Security
$952.3 billion
72.5%
Old-Age and Survivor’s Insurance
$814.0 bil ion
61.9%
Disability Insurance
$138.3 bil ion
10.5%
Medicare
$294.8 billion
22.4%
Unemployment Insurance
$56.6 billion
4.3%
Deposits by States (State Unemployment Tax)a
$50.4 bil ion
3.8%
Federal Unemployment Tax
$6.1 bil ion
0.5%
Railroad Unemployment Receiptsb
$0.1 bil ion
c
Other Retirement Receipts
$10.3 billion
0.8%
Railroad Retirement
$4.7 bil ion
0.4%
Social Security Equivalent Benefit
$1.8 bil ion
0.1%
Rail Pension and Supplemental Annuity
$2.9 bil ion
0.2%
Other Retirement
$5.6 bil ion
0.4%
Federal Employee Retirement
$5.6 bil ion
0.4%
Non-Federal Employee Retirement
d
d
Total
$1,314.1 billion
100.0%
Source: Table created by CRS using data from Office of Management and Budget, “Analytical Perspectives:
Governmental Receipts,” Table 11-3, available at https://www.whitehouse.gov/omb/analytical-perspectives/.
Notes: Figures may not add to totals and subtotals indicated due to rounding.
a. Deposits by states cover the benefit part of the program. Federal unemployment receipts cover
administrative costs at both the federal and state levels.
b. Railroad unemployment receipts cover both the benefits and administrative costs of the program for the
railroads.
c. Less than 0.05%.
d. Less than $50 mil ion.

14 The revenue split between the Social Security OASI and DI programs has varied over time.
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Social Security
The Social Security tax—funding retirement and survivor’s as well as disability benefits—is the
largest portion of federal payroll tax receipts. A tax of 6.2% of covered wages is imposed on both
employees and employers (for a total tax of 12.4%) to fund the program.15 Self-employed
workers pay 12.4% of their net self-employment earnings (business earnings minus the costs of
doing business) into Social Security as a portion of their self-employment taxes. While most
employees in the United States are covered by Social Security, and pay the Social Security
payroll tax, coverage is not universal.16 For example, certain government employees (civilian
federal employees hired before 1984 and some state and local government employees) may not
participate in Social Security.17
The employee portion of the Social Security tax is directly withheld from wages paid to an
employee. The employee’s pay stub often lists the deduction as “Social Security” or “OASDI,”
which stands for Old-Age, Survivors, and Disability Insurance—the official name of the tax
levied in 26 U.S.C. §3103(a) and §3111(a).18 The employee portion withheld and the employer
portion are deposited with the IRS, generally monthly or semiweekly, when the employer
processes payroll.19 Employers generally file payroll tax returns quarterly.20
Social Security taxes are levied starting with the first dollar earned up to an earnings threshold
that is generally adjusted annually for growth in average wages ($147,000 in 2022).21 Earnings
above the threshold are not subject to tax and do not apply toward the calculation of the worker’s
primary insurance benefit.22 Workers who paid Social Security taxes on wages in excess of the
threshold (as a result of working multiple jobs, for instance) can file to receive a refund of the
overpaid taxes.
Social Security payroll taxes were first enacted with Titles VIII and IX of the Social Security Act
of 1935 (P.L. 74-271). The first Social Security tax was a 1% levy on employees on wages earned
starting in 1937, with employers also paying the same amount. The Federal Insurance

15 Generally, the tax base for payroll taxes is all compensation for employment. There are exceptions, the most
important of which are amounts paid by the employee for health, dental, disability, and the non-taxable portion of
group-term life insurance; employer payments in connection with health and disability insurance payments after six
months after the employee last worked for the employer; and employer contributions to certain qualified retirement
plans. The full list of exceptions is at 26 U.S.C. §3121. Federal Insurance Contributions Act (FICA) and Federal
Unemployment Tax Act (FUTA) taxes apply to compensation paid to employees in “covered employment.” Certain
types of employment are not covered employment, including certain agricultural and casual labor; certain government
employment, typically in cases where employees are covered by a state or local retirement plan system; and certain
family employment. See 26 U.S.C. §3121(b).
16 See CRS In Focus IF11824, Social Security: Who Is Covered Under the Program?, by Dawn Nuschler.
17 Other types of employment that may not be covered by Social Security include (but are not limited to) certain family
employment, work performed by students, certain members of the clergy and religious orders, and the earnings of farm
workers, election officials, and household employees, so long as earnings are below certain thresholds.
18 Withholdings may also appear on an employee’s pay stub as FICA, or Federal Insurance Contribution Act
withholdings (referring to Social Security and Medicare contributions, collectively).
19 Semiweekly deposits are made every two weeks. See 26 C.F.R. §31.6302-1.
20 Employers use Form 941 to file quarterly payroll tax returns. Other forms may be used in certain situations. For
more, see the Internal Revenue Service’s webpage “Depositing and Reporting Payroll Taxes,” at https://www.irs.gov/
businesses/small-businesses-self-employed/depositing-and-reporting-employment-taxes.
21 For additional information, see CRS Report RL32896, Social Security: Raising or Eliminating the Taxable Earnings
Base, by Zhe Li.
22 For additional information, see CRS Report R46658, Social Security: Benefit Calculation, by Barry F. Huston.
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Contribution Act (FICA, 26 U.S.C. §§3101-3128) moved the tax provisions to the Internal
Revenue Code in 1954, and prescribed further increases.23
Social Security (and Medicare) payroll tax rates have largely remained the same since 1990
(outside of the 2011-2012 Social Security payroll tax holiday, discussed below in “Employee
Payroll Tax Holiday”) (Figure 6). The recent period of steady rates follows a period of regular
rate increases. Combined Social Security payroll tax rates rose from 2% in 1949 to 12.4% in
1990. The last Social Security tax rate increase was part of the Social Security Amendments of
1983 (P.L. 98-21).
Figure 6. Social Security and Medicare Tax Rates, 1937 to 2021
Tax rates as a percentage of covered earnings

Source: Figure created by CRS using data from Social Security Administration, “Social Security and Medicare
Tax Rates,” available at https://www.ssa.gov/oact/progdata/taxRates.html.
Notes: Rates include both the employee and employer portions of the tax. Rates apply to covered earnings.
When first enacted, the Social Security tax did not apply to self-employed workers. The Self-
Employment Contributions Act of 1954 created the self-employment tax, an analogous tax on the
net earnings of self-employed workers’ businesses (business receipts minus the cost of doing
business) that funds Social Security and Medicare Part A. The tax rate on self-employed workers
has varied over time. The Social Security portion started as 2.25% in 1951—less than twice the
OASDI rate on employees in that year, 1.5%. The Social Security portion of the self-employment
tax would not be twice the employee tax rate until 1984, when the employee tax was 5.7% and
the self-employed rate was 11.4%.
Taxpayers pay a single Social Security tax, but it is administratively split between the OASI and
DI trust funds. The current combined Social Security tax rate is 12.4% of taxable wages, of which
10.6% goes to the OASI Trust Fund and 1.8% to the DI Trust Fund.24 Congress has, in the past,

23 A brief history of the Social Security program generally can be found in CRS Report R42035, Social Security
Primer, by Barry F. Huston.
24 See Social Security Administration, The 2020 Annual Report of the Board of Trustees of the Federal Old-Age and
Survivors Insurance and Federal Disability Insurance Trust Funds, Table II.B2, at https://www.ssa.gov/oact/TR/2020/
II_B_cyoper.html#99490.
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changed the statutory split between the trust funds (located at 42 U.S.C. §401(b)(1)(A) for
employees and 42 U.S.C. §401(b)(2)(A) for self-employed workers) in response to expected
shortfalls in the OASI or DI trust funds.25
In FY2021, according to OMB, the Social Security tax raised $952.3 billion in revenue.26 Of that
amount, $814.0 billion went to the OASI trust fund and $138.3 billion went to the DI trust fund.27
Social Security tax receipts are expected to grow relatively slowly (at about 1% per year)
compared with historic averages for the next several years, before returning to higher growth
(around 4% per year) starting in 2024.28
The revenues raised by the Social Security tax are not expected to be enough to fund full statutory
benefits indefinitely. The OASI trust fund is projected to be depleted in 2033, while the DI trust
fund is expected to be depleted in 2057.29
Medicare
Medicare was established by the Social Security Amendments of 1965 (P.L. 89-97) to provide
health insurance to individuals 65 and older, and has been expanded over the years to include
permanently disabled individuals under 65.30 The original statute created Medicare Parts A
(Hospital Insurance, or HI) and B (Supplementary Medical Insurance, or SMI), and also created a
payroll tax to fund the Medicare Part A portion (26 U.S.C. §3101(b)(1) for employees and
§3111(b) for employers). In 1966, employers and employees each paid 0.35% of wages in
Medicare payroll taxes (the combined rate was 0.7%). Self-employed workers paid 0.35% of their
net self-employment earnings starting in the same year. At that time, Medicare payroll taxes
applied to an earnings base of $6,600.
The Medicare tax increased a number of times (and decreased once) between 1966 and 1986 (see
Figure 6 above).31 The increase to the current rate—a combined (employer and employee) 2.9%
of wages—was made by the Social Security Amendments of 1977 (P.L. 95-216).32 Additionally,
as added by the Patient Protection and Affordable Care Act (ACA, P.L. 111-148 as amended),
certain higher-income households may be subject to an additional Medicare tax (discussed below
in “Additional Medicare Tax”). In addition to increases in the Medicare payroll tax rate, the

25 For more information on past legislative changes to the allocation of payroll taxes between the OASI and DI trust
funds, see CRS Report R43318, The Social Security Disability Insurance (DI) Trust Fund: Background and Current
Status, by William R. Morton.
26 Office of Management and Budget, “Analytical Perspectives: Governmental Receipts,” Table 11-3, available at
https://www.whitehouse.gov/omb/analytical-perspectives/.
27 Data from the Social Security Administration for FY2021 report payroll tax receipts of $972.3 billion, with $831.1
billion for OASI and $141.2 billion for DI. Data retrieved March 3, 2022, from Social Security Online, “Trust Fund
Data,” at https://www.ssa.gov/cgi-bin/ops_period.cgi.
28 See Congressional Budget Office, An Update to the Budget and Economic Outlook, 2021 to 2031, Revenue
Projections by Category, Table 4, as of July 2021, at https://www.cbo.gov/publication/57218.
29 For more on the Social Security trust funds, see CRS Report RL33028, Social Security: The Trust Funds, by Barry F.
Huston. For more on what may happen if trust funds are depleted, see CRS In Focus IF10522, Social Security’s
Funding Shortfall, by Barry F. Huston.
30 See CRS Report R40425, Medicare Primer, coordinated by Patricia A. Davis.
31 For historical Medicare payroll tax rates, see Appendix B in CRS Report RS20946, Medicare: Insolvency
Projections, by Patricia A. Davis.
32 The most recent Medicare payroll tax increase for self-employed workers, also to 2.9%, was part of the Social
Security Amendments of 1983 (P.L. 98-21) and also took effect starting in 1986.
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earnings tax base was increased and ultimately eliminated.33 The Medicare HI tax currently
applies to all wage earnings or net self-employment income earned in covered employment.34
The employee portion of the Medicare tax is withheld directly from an employee’s paycheck,
where it is often listed as “Medicare.” Employers pay their portion separately, depositing their
portion with the IRS near the pay date and filing to reconcile payments on a quarterly basis. As
with the Social Security tax, many economists believe that the employer portion of the Medicare
tax results in lower wages paid to workers.
Medicare Part A benefits are paid for out of the Hospital Insurance Trust Fund, which is primarily
funded by the Medicare HI tax. The Medicare payroll taxes paid by current workers and their
employers are used to pay Part A benefits for today’s Medicare beneficiaries.35 In recent years,
payroll tax revenues and other Part A income sources have not been sufficient to fully cover the
expenditures of Medicare Part A. In their 2021 report, the Medicare Trustees forecast that the
Hospital Insurance Trust Fund will be depleted in 2026.36
In FY2021, the Medicare tax and Additional Medicare Tax (described below) together raised
$294.8 billion.37 The Congressional Budget Office forecasts fairly consistent Medicare tax
revenue growth of around 3.9% a year from FY2024 to FY2031, after projected revenue growth
increases following the COVID-19 pandemic.38
Additional Medicare Tax
The Patient Protection and Affordable Care Act (ACA, P.L. 111-148, as amended by P.L. 111-
152) created an additional Medicare tax levied on taxpayers with relatively high incomes.39 The
Additional Medicare Tax is a payroll tax levied on wages and net self-employment income above
certain thresholds.40

33 For historical information on the maximum tax base, see Appendix B in CRS Report RS20946, Medicare: Insolvency
Projections, by Patricia A. Davis.
34 As with the Social Security payroll tax, most employment is covered employment. There are, however, some
exceptions. For more, see Internal Revenue Service, Publication 15 (Circular E), Employer’s Tax Guide, 2022, at
https://www.irs.gov/pub/irs-pdf/p15.pdf.
35 For a description of Medicare trust funds and financing, see CRS Report R43122, Medicare Financial Status: In
Brief, by Patricia A. Davis.
36 For additional information on Medicare Part A funding and solvency estimates over time, see CRS Report RS20946,
Medicare: Insolvency Projections, by Patricia A. Davis. This report also addresses what might happen if the HI trust
fund were to become insolvent.
37 Office of Management and Budget, “Analytical Perspectives: Governmental Receipts,” Table 11-3, available at
https://www.whitehouse.gov/omb/analytical-perspectives/. The Medicare Trustees reported $303.3 billion in HI trust
fund payroll tax revenue for calendar year 2020. See Boards of Trustees, Federal Hospital Insurance and Federal
Supplementary Medical Insurance Trust Funds, 2021 Annual Report of the Boards of Trustees of the Federal Hospital
Insurance and Federal Supplementary Medical Insurance Trust Funds, August 31, 2021, at https://www.cms.gov/files/
document/2021-medicare-trustees-report.pdf.
38 See Congressional Budget Office, An Update to the Budget and Economic Outlook, 2021 to 2031, Revenue
Projections by Category, Table 4, as of July 2021, at https://www.cbo.gov/publication/57218.
39 The additional Medicare tax on higher wage incomes was enacted in P.L. 111-148 (§9015 and §10906).
40 The Net Investment Income Tax (NIIT), which applies to certain nonwage income of high-income taxpayers, was
enacted in P.L. 111-152 (§1402). While this tax is often described as being an additional Medicare contribution, the
revenues from this tax are not allocated to the Medicare trust fund. As an income tax, the NIIT is beyond the scope of
this report. For more, see CRS In Focus IF11820, The 3.8% Net Investment Income Tax: Overview, Data, and Policy
Options, by Mark P. Keightley.
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The Additional Medicare Tax applies to wage and net self-employment earnings above thresholds
that vary based on filing status. A tax of 0.9% is levied on income above the thresholds in Table
2, in addition to the standard combined 2.9% Medicare tax.
Table 2. Income Thresholds for Additional Medicare Tax
Additional Medicare Tax Applies to
Filing Status
Wage and Net Self-Employment Income Above
Married Filing Jointly
$250,000
Married Filing Separately
$125,000
Single
$200,000
Head of Household
$200,000
Qualifying Widow(er) with dependent child
$200,000
Source: Table created by CRS using information from Internal Revenue Service, “Questions and Answers for
the Additional Medicare Tax,” available at https://www.irs.gov/businesses/small-businesses-self-employed/
questions-and-answers-for-the-additional-medicare-tax.
Notes: Income amounts are not indexed for inflation.
Unlike the standard Medicare tax, the Additional Medicare Tax is levied only on employees.
However, employers are required to withhold the Additional Medicare Tax when it applies given
their knowledge of the employee’s situation (reported filing status and wages paid by that
employer). Employees must pay any difference between withholding and their Additional
Medicare Tax liability (due to a change in filing status or having multiple jobs, for instance) on
their annual income tax return. If the unpaid amount is large enough, it may trigger a need for the
employee to file quarterly estimated tax payments.
The income thresholds are not indexed for inflation. This means that the Additional Medicare Tax
will apply to more taxpayers as wages rise due to inflation. For example, adjusting for inflation,
$197,539 in 2019 was worth $179,700 in 2013, the year the tax was first in effect.41 For 2019,
3.0% of individual tax returns filed included the Additional Medicare Tax, as compared to 1.9%
of returns filed for 2013.42
When the Additional Medicare Tax was enacted, the Joint Committee on Taxation (JCT)
estimated that it would raise $86.8 billion over the FY2010 to FY2019 10-year budget window.43
Unemployment Insurance
The Unemployment Compensation (UC) program is constructed as a joint federal-state program
among the federal government, the states, the District of Columbia, Puerto Rico, and the U.S.
Virgin Islands.44 The UC program is financed by federal taxes under the Federal Unemployment

41 Inflation adjusted using annual inflation averages from Bureau of Labor Statistics, R-CPI-U-RS, All Items, for 2013
and 2020, at https://www.bls.gov/cpi/research-series/r-cpi-u-rs-home.htm.
42 Internal Revenue Service, SOI Tax Stats – Individual Income Tax Returns Complete Report (Publication 1304),
Table 3.3 for years 2019 and 2018, at https://www.irs.gov/statistics/soi-tax-stats-individual-income-tax-returns-
complete-report-publication-1304.
43 For FY2014 through FY2019, it was estimated that annual revenue collections would average $12.3 billion per year.
See Joint Committee on Taxation, ERRATA – “General Explanation Of Tax Legislation Enacted In The 111th
Congress,” JCX-20-11, March 23, 2011, at https://www.jct.gov/publications/2011/jcx-20-11/.
44 There is wide variation in the designs of state UC programs; these differences are beyond the scope of this report. For
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Tax Act (FUTA, 26 U.S.C. §§3301-3311) and by state payroll taxes under the State
Unemployment Tax Acts (SUTA).45 The FUTA tax funds both federal and state administrative
costs as well as the federal share of the Extended Benefit (EB) program, loans to insolvent state
UC accounts, and state employment services.
The gross FUTA tax rate is 6.0% of covered wages, which includes wages from the first dollar
paid up to $7,000 per calendar year.46 If a state UC program complies with all federal rules,
employers are allowed credits against their FUTA tax liability, which can reduce their net FUTA
tax rate to as low as 0.6% on the first $7,000 of each worker’s earnings.47 Most employers will
pay a maximum of $7,000 x 0.6% = $42 per employee per calendar year in FUTA tax.
FUTA revenues provide the funding for grants to the states to administer their UC programs and
the federal share (50%) of Extended Benefit payments.48 Congress must provide an annual
discretionary appropriation for UC administration.49
The FUTA tax was introduced in Title IX of the Social Security Act of 1935 (P.L. 74-271). The
tax started as a 1.0% levy on all taxable wages (with no maximum) paid by employers with eight
or more employees, with a credit of up to 0.9% allowed for taxes paid to state unemployment
programs. The first net FUTA tax was therefore (1.0% - 0.9%) = 0.1% of wages. Since then, a
taxable wage base limit was introduced (and expanded) and the tax rate increased. The Tax Equity
and Fiscal Responsibility Act of 1982 (P.L. 97-248) set the current taxable wage base of $7,000
(applied starting in 1983) and the current gross FUTA tax rate (6.0%) and net FUTA tax rate
(0.6%), starting in 1985.50
A parallel system provides unemployment and sickness benefits for railroad employees. The
Railroad Unemployment Insurance Act (45 U.S.C. §§351-369) levies a payroll tax on railroad
employers to fund benefits only for railroad employees. The employer’s tax rate ranges between

more on the Unemployment Compensation program, see CRS In Focus IF10336, The Fundamentals of Unemployment
Compensation, by Julie M. Whittaker and Katelin P. Isaacs.
45 SUTA taxes are required to fund regular UC benefits and the state share of the EB program. In most states, an
employer’s SUTA tax rate is based on the amount of UC benefits paid to former employees. Generally, the more UC
benefits paid to its former employees, the higher the employer’s tax rate, up to a maximum established by state law.
46 For more on exemptions and the limited cases when employment is not covered, see Internal Revenue Service,
Publication 15 (Circular E), Employer’s Tax Guide, 2022, at https://www.irs.gov/pub/irs-pdf/p15.pdf.
47 Employers generally qualify for credits of 5.4% for SUTA payments to be applied against the FUTA tax rate. State
employers may face a FUTA credit reduction if the state’s unemployment trust fund account has an outstanding federal
loan. FUTA credit reductions are most common in the years following an economic recession. See CRS Report
RS22954, The Unemployment Trust Fund (UTF): State Insolvency and Federal Loans to States, by Julie M. Whittaker.
In 2020, only businesses in the U.S. Virgin Islands (USVI) faced a FUTA credit reduction, which was 3.0%. Therefore,
businesses in the USVI paid a federal unemployment tax rate of 6.0% - (5.4% - 3.0%) = 3.6% on taxable wages. For
2021, it is 3.3% for USVI (net tax of 3.9%). For a list of states with FUTA credit reductions, see U.S. Department of
Labor, Employment & Training Administration, Office of Unemployment Insurance, “Historical FUTA Credit
Reductions,” at https://oui.doleta.gov/unemploy/futa_credit.asp.
48 EB provides additional UC benefits after regular UC benefits are exhausted to eligible workers in states experiencing
high levels of unemployment. There have been two exceptions to the 50% federal cost sharing. The first was 2009 to
2013, and the second was in 2020 to 2021. For funding details of UC and EB benefits, see CRS Report RS22077,
Unemployment Compensation (UC) and the Unemployment Trust Fund (UTF): Funding UC Benefits, by Julie M.
Whittaker.
49 Grants are then made to individual states by the Secretary of Labor based on the funding constraints and information
provided by states. For more details on this process, see CRS In Focus IF10838, Funding the State Administration of
Unemployment Compensation (UC) Benefits, by Julie M. Whittaker, Katelin P. Isaacs, and Abigail R. Overbay.
50 For a detailed legislative history of the FUTA tax, see CRS Report R44527, Unemployment Compensation: The
Fundamentals of the Federal Unemployment Tax (FUTA), by Julie M. Whittaker.
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3.15% and 12.0% on the first $1,710 in each employee’s monthly earnings. The benefit is
administered by the Railroad Retirement Board, an independent federal agency.51
In FY2021, the FUTA tax raised $6.1 billion, which mostly funded administrative costs for the
federal government and state programs. Additionally, states deposited $50.4 billion from their
state unemployment taxes into their respective accounts in the federal Unemployment Insurance
Trust Fund. The Railroad Unemployment Repayment Tax raised $111 million, which funded both
administration and benefits for that program.52
Other Payroll Taxes
Other payroll taxes and forms of retirement receipts, mostly funding retirement for special
populations, raised less than 1% of total FY2021 payroll tax revenues. Railroad retirement
benefits provide retirement annuities to railroad workers and their family members. Federal
employee pensions are funded by a payroll tax on certain federal employees.
The Railroad Retirement Tax Act (26 U.S.C. §§3201-3241) provides a system of retirement
benefits for railroad workers funded by payroll taxes. Railroad workers pay two payroll taxes to
participate in the system. The tier I tax is similar to the Social Security tax and funds the Social
Security level of benefits and associated administrative expenses. Employees and employers each
pay 6.2% of wages up to the same wage cap as the Social Security tax ($147,000 in 2022). The
tier II tax funds several other retirement programs for railroad workers, including tier II
retirement annuities, excess tier I benefits (the portion of tier I benefits more generous than Social
Security), and supplemental annuities. The tier II tax is set each year based on the financial
position of the railroad retirement system’s accounts. In 2022, the tax was 13.1% on employers
and 4.9% on employees, up to $109,200 in wages.53
Payroll taxes are the largest contributor to the Railroad Retirement Board’s retirement, disability,
and survivor program. Payroll taxes contributed 39.2% of gross funding to the program in
FY2020.54 In FY2021, OMB reports the Social Security Equivalent Benefit portion of the tier I
tax raised $1.8 billion, while other taxes that fund other railroad retirement programs (funded by
part of the tier I tax and the tier II tax) raised $2.9 billion.55 The railroad retirement system is
expected to remain solvent for at least the next 25 years.
Additionally, certain other retirement taxes are considered federal payroll taxes. Together, these
taxes raised $5.6 billion in FY2021. Federal employees’ contributions to the Civil Service
Retirement System and the Federal Employee Retirement System make up most of that amount.56

51 For more on Railroad Unemployment and Sickness Benefits, see CRS Report RS22350, Railroad Retirement Board:
Retirement, Survivor, Disability, Unemployment, and Sickness Benefits, by Zhe Li.
52 Office of Management and Budget, “Analytical Perspectives: Governmental Receipts,” Table 11-3, available at
https://www.whitehouse.gov/omb/analytical-perspectives/.
53 For more on the railroad retirement system, see CRS Report RS22350, Railroad Retirement Board: Retirement,
Survivor, Disability, Unemployment, and Sickness Benefits, by Zhe Li.
54 U.S. Railroad Retirement Board, United States Railroad Retirement Board: 2021 Annual Report, at
https://www.rrb.gov/sites/default/files/2021-09/2021_Annual_Report.pdf.
55 The Railroad Retirement Board Annual Report reports FY2020 tier I and tier II tax revenues of $2.3 billion and $2.8
billion, respectively.
56 For more on federal employee retirement systems, see CRS Report 98-810, Federal Employees’ Retirement System:
Benefits and Financing, by Katelin P. Isaacs.
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Payroll Tax Administration
Not all payroll taxes are reported and paid together when employers make deposits with the IRS.
Generally, Social Security and Medicare taxes are paid together, while unemployment taxes are
paid separately.
The frequency of paying and filing Social Security and Medicare taxes depends on an employer’s
tax liability, not on their pay schedule. Employers with a combined Social Security, Medicare,
and individual income tax withholding liability of over $50,000 over a four-quarter lookback
period are semiweekly depositors. Semiweekly depositors must deposit accumulated tax
liabilities by a few days after a payday.57 Generally, employers with a tax liability of between
$1,001 and $50,000 will deposit their accumulated tax liabilities on the 15th day of each month,
covering the tax liability incurred during the previous month.
Both semiweekly and monthly depositors must file IRS Form 941 quarterly to reconcile the tax
payments they made during the previous quarter. The IRS does not collect information about the
breakdown of deposits when they are made. On Form 941, the employer will report the amount of
wages paid; individual income tax, Social Security tax, and Medicare tax withheld; certain
payroll tax credits; and other amounts.
The smallest employers—those whose annual liability for individual income tax, Social Security,
and Medicare tax withholding is $1,000 or less—deposit and file their taxes once a year. These
employers do so using Form 944.
FUTA taxes are paid quarterly for all employers, regardless of size, if they paid wages to any
covered employees. However, if an employer’s FUTA tax liability for a quarter is less than $500,
they do not need to make a deposit and can roll that liability over to the next quarter. While
deposits are made on a quarterly basis, payments are reconciled annually using IRS Form 940.
Policies Providing Payroll Tax Relief
Payroll tax reductions can be used to provide tax relief to individuals or businesses, or be
designed to support certain economic activities. Various forms of payroll tax relief were enacted
in response to the Great Recession (2007-2009) and the COVID-19 pandemic. As discussed
further below, one reason for payroll tax relief during economic downturns is that it can often
increase resources available to businesses or individuals more quickly than income tax relief.
Great Recession Payroll Tax Relief
In the years immediately following the Great Recession, two payroll tax relief provisions were
enacted in an effort to support hiring and strengthen the economic recovery. One provision
suspended the employer’s share of the payroll tax for certain newly hired employees. The other
temporarily reduced employees’ payroll taxes. These policies collectively were projected to
reduce payroll tax collections by $233.3 billion (Table 3).

57 Although semiweekly depositors will generally make payments more frequently than monthly depositors, the exact
frequency depends on the employer’s payroll schedule. A biweekly payroll schedule would generally result in about
two deposits a month, while a monthly payroll schedule would result in one deposit a month. However, semiweekly
depositors with a monthly payroll must still follow the semiweekly deposit schedule. This means they must deposit
their tax liability by a few days after payroll, instead of by the 15th day of the following month. For more about payroll
tax depositing schedules, see Internal Revenue Service, Employer’s Tax Guide (Pub. 15, 2022), at https://www.irs.gov/
publications/p15#en_US_2021_publink1000202435.
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Payroll Tax Suspension for Newly Hired Employees
In March 2010, payroll tax relief was provided in an effort to stimulate hiring during the
economic recovery from the Great Recession. The Hiring Incentives to Restore Employment
(HIRE) Act of 2010 (P.L. 111-147) suspended the employer’s share of the 2010 payroll tax (6.2%
of the worker’s earnings that would have otherwise been taxable) for qualified workers (generally
unemployed individuals) hired between February 3, 2010, and January 1, 2011. The provision
applied to wages paid after March 18, 2010, through December 31, 2010. The Social Security
trust funds were “made whole” by a transfer of general revenue.
Economists have mixed views on whether hiring tax incentives can be effective, and in what
circumstances.58 The effectiveness of using payroll tax relief to spur employment depends on how
businesses use the additional cash flow. In a 2010 analysis of payroll tax incentives for
employment, the Congressional Budget Office (CBO) observed that reducing employers’ payroll
taxes would provide a small added incentive to increase employment or hours worked.59 Broadly,
if employers have laid off employees due to lack of consumer demand, employers may be slow to
hire, even with employment subsidies. Economic theory tends to indicate that demand-side
stimulus, rather than supply-side (like employer tax relief), is the most effective tool for boosting
employment during periods of economic weakness.60
The policy was estimated to reduce federal revenue by $7.6 billion ($4.2 billion in FY2010 and
$3.4 billion in FY2011) (Table 3).61
Employee Payroll Tax Holiday
In December 2010, in an effort to provide economic stimulus, Congress temporarily reduced the
employee and self-employed OASDI payroll tax shares by two percentage points (to 4.2% for
employees and 10.4% for the self-employed).62 The Social Security trust funds were “made
whole” by a transfer of general revenue.63 The temporary reduction was scheduled to expire at the
end of 2011, but was extended for two months as part of the Temporary Payroll Tax Cut
Continuation Act of 2011 (P.L. 112-78). The temporary payroll tax rate reduction was extended
through the end of 2012 in the Middle Class Tax Relief and Job Creation Act of 2012 (P.L. 112-
96) and subsequently allowed to expire at the end of 2012.64

58 David Neumark, “Spurring Job Creation in Response to Severe Recessions: Reconsidering Hiring Credits,” Journal
of Policy Analysis and Management, vol. 32, no. 1 (Winter 2013), pp. 142-171.
59 Congressional Budget Office, Policies for Increasing Economic Growth and Employment in 2010 and 2011, January
2010, at https://www.cbo.gov/sites/default/files/111th-congress-2009-2010/reports/01-14-employment.pdf.
60 For discussion of hiring tax incentives in the COVID-19 pandemic context, see CRS Insight IN11436, Employment
Tax Incentives to Promote Recovery from the COVID-19 Recession: Policy Options, by Gary Guenther and Molly F.
Sherlock.
61 Joint Committee on Taxation, Estimated Revenue Effects Of The Revenue Provisions Contained In An Amendment
To The Senate Amendment To The House Amendment To The Senate Amendment To H.R. 2847, The “Hiring Incentives
To Restore Employment Act” Scheduled For Consideration By The House Of Representatives On March 4, 2010, JCX-
6-10, March 4, 2010, at https://www.jct.gov/publications/2010/jcx-6-10/.
62 Section 610 of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (P.L. 111-
312).
63 For additional background, see CRS Report R41648, Social Security: Temporary Payroll Tax Reduction, by Dawn
Nuschler.
64 For additional background, see CRS Report R42103, Extending the Temporary Payroll Tax Reduction: A Brief
Description and Economic Analysis, by Donald J. Marples and Molly F. Sherlock.
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Employee or individual payroll tax relief can provide effective demand-side fiscal stimulus,
particularly if deployed during an economic downturn.65 There are, however, features of
employee payroll tax cuts that may limit their potential for economic stimulus. For example, an
employee payroll holiday assists only individuals who are working. It does not directly support
individuals who have lost their jobs. The most stimulative individual tax relief tends to be one
that targets lower-income populations (e.g., refundable income tax credits or direct payments such
as stimulus checks).66
The policy was estimated to reduce federal revenue by $111.7 billion ($67.2 billion in FY2011
and $44.4 billion in FY2012) when initially enacted. The subsequent extensions were estimated
to reduce payroll tax receipts by $20.8 billion and $93.2 billion, respectively (Table 3).
Table 3. Great Recession Payroll Tax Relief
Billions of dollars
Total
Reduction

2010
2011
2012
2013

in Revenue
Payroll Tax Suspension for Newly Hired

Employees

HIRE Act
$4.2
$3.4
—
—

$7.6
Employee Payroll Tax Holiday

Tax Relief, Unemployment Insurance Reauthorization,
—
$67.2
$44.4
—

$111.7
and Job Creation Act of 2010

Temporary Payrol Tax Cut Continuation Act of 2011
—
—
$18.8
$2.0

$20.8

Middle Class Tax Relief and Job Creation Act of 2012
—
—
$70.1
$23.1

$93.2
Source: Joint Committee on Taxation, “General Explanation of Tax Legislation Enacted in the 111th Congress,”
JCS-2-11, March 2011, at https://www.jct.gov/publications/2011/jcs-2-11/; and Joint Committee on Taxation,
“General Explanation of Tax Legislation Enacted in the 112th Congress,” JCS-2-13, February 2013, at
https://www.jct.gov/publications/2013/jcs-2-13/.
Notes: Cost estimates include the estimated revenue reduction from the policy as enacted as well as estimated
revenue reductions from subsequent extensions or modifications.
COVID-19 Payroll Tax Relief
Various forms of payroll tax relief were used during the COVID-19 pandemic, both to encourage
and compensate business responses to the pandemic and to provide tax relief. Often, payroll tax
relief can increase resources available to businesses or individuals more quickly than income tax
relief. This feature made payroll tax relief attractive during the COVID-19 pandemic. As
discussed below, payroll tax deferrals were also used to provide relief in response to the COVID-
19 pandemic. Deferrals might be attractive as a policy response when economic disruptions are

65 For additional background, see CRS Report R45780, Fiscal Policy Considerations for the Next Recession, by Mark
P. Keightley; CRS Report RS21126, Tax Cuts and Economic Stimulus: How Effective Are the Alternatives?, by Jane G.
Gravelle; CRS Insight IN11230, Payroll Tax Cuts as an Economic Stimulus Response to Coronavirus Disease
(COVID-19), by Donald J. Marples and Molly F. Sherlock; and CRS Report R46460, Fiscal Policy and Recovery from
the COVID-19 Recession, by Jane G. Gravelle and Donald J. Marples.
66 For more, see CRS Insight IN11234, Tax Cuts as Fiscal Stimulus: Comparing a Payroll Tax Cut to a One-Time Tax
Rebate, by Molly F. Sherlock and Donald J. Marples.
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expected to be relatively brief, and followed by a relatively quick return to more normal
economic conditions.
Paid Leave Payroll Tax Credits67
The Families First Coronavirus Response Act (FFCRA; P.L. 116-127) included an employer
payroll tax credit, intended to compensate employers for the cost associated with providing paid
sick and family leave as required in FFCRA.68 The payroll tax credits were claimed against the
employer’s share of the Social Security or railroad retirement payroll tax in each calendar quarter.
Employers could reduce payroll tax deposits in anticipation of receiving paid leave tax credits.
Employers could also request an advance of tax credit amounts. The tax credit was refundable,
meaning that if the amount of tax credits an employer claimed exceeded payroll tax liability, the
excess was received as a payment from the Treasury.69
The Social Security trust funds were not generally affected by the tax credit, as a general fund
transfer was provided to offset any reduction in trust fund revenues from the tax credit.
Payroll Tax Credit for Sick Leave
Under FFCRA, an employer could claim a tax credit for 100% of the amount required to be paid
in sick leave wages from April 1, 2020, through December 31, 2020. Sick leave wages were
required to be paid for up to 80 hours (two workweeks) for a full-time employee (prorated for
part-time employees). The maximum amount required to be paid to workers using FFCRA sick
leave depended on the purpose for which the sick leave was taken, subject to two different
maximum amounts.
 Sick leave wages were limited to $511 per day for employees taking leave
because (1) the employee was subject to a federal, state, or local quarantine or
isolation order related to COVID-19; (2) the employee was advised by a health
care provider to self-quarantine due to COVID-19; or (3) the employee was
experiencing symptoms of COVID-19 and was seeking a medical diagnosis.
 Sick leave wages were limited to $200 per day for employees taking leave
because (a) the employee was caring for an individual (with whom the employee
has a close personal relationship) who was experiencing a situation described in
number (1) or (2) above; (b) the employee was caring for their own minor child
whose school, place of care, or caregiver was closed or unavailable due to

67 For more information, see CRS Insight IN11243, Tax Credit for Paid Sick and Family Leave in the Families First
Coronavirus Response Act (H.R. 6201) (Updated), by Molly F. Sherlock; and CRS In Focus IF11739, Payroll Tax
Credit for COVID-19 Sick and Family Leave, by Molly F. Sherlock.
68 For more information, see CRS In Focus IF11487, The Families First Coronavirus Response Act Leave Provisions,
by Sarah A. Donovan and Jon O. Shimabukuro. The Emergency Paid Sick Leave Act (Division E of P.L. 116-127, as
modified by H.Res. 904) generally required private employers with fewer than 500 employees, and all government
employers, to provide employees with two workweeks of paid sick leave for certain COVID-19-related leave purposes.
The Emergency Family and Medical Leave Expansion Act (Division C of P.L. 116-127, as modified by H.Res. 904)
generally provided employees of private employers with fewer than 500 employees, state and local government
employees, and some federal employees expanded job-protected Family and Medical Leave Act (FMLA) leave for
certain caregiving responsibilities. Under certain conditions, this expanded family leave was required to be partially
compensated by employers. For both sick and family leave, the law included provisions that allowed certain health care
providers, emergency responders, and employees in certain small businesses to be excluded from leave requirements.
69 Self-employed individuals, including gig economy workers, were eligible for income tax credits similar to the payroll
tax credits described in this section. For self-employed individuals, the income tax credit was refundable (meaning that
if the tax credit amount exceeded the individual’s income tax liability, the excess was received as a refund, or payment,
from the Treasury).
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COVID-19; or (c) the employee was experiencing any other “substantially
similar condition” as specified by the Secretary of Health and Human Services.
The tax credit amounts for paid sick leave could be increased by the amount employers paid for
an employee’s health care plan while they were on leave.
Payroll Tax Credit for Family Leave
The employer tax credit for paid family leave was provided for employees taking leave to care for
their own minor child whose school or place of care was closed due to COVID-19. For this
component of the credit, the paid leave period began after an individual had already taken 10 days
of leave for the family leave purpose described above. These 10 days of leave could consist of
unpaid leave, or an employee could elect to use paid vacation, personal, or another form of paid
leave (including the FFCRA paid sick leave). After this 10-day period, employees could receive a
benefit from their employers that was at least two-thirds of the employee’s usual pay, but not
more than $200 per day. The tax credit for family leave wages was limited to $200 per day, and
$10,000 total per employee. The tax credit amounts for paid family leave could also be increased
by the amount employers paid for an employee’s health care plan while they were on leave.
Extensions of the Paid Leave Payroll Tax Credits
The COVID-related Tax Relief Act of 2020, enacted as Division N, Title II, Subtitle B of the
Consolidated Appropriations Act, 2021 (P.L. 116-260), extended the payroll tax credits for paid
leave through March 31, 2021. The credits applied as if the corresponding employer mandates
were also extended (the leave mandates expired at the end of 2020). Under P.L. 116-260, the
payroll tax credits for paid leave were thus available for employers voluntarily providing
qualifying paid leave through March 31, 2021.
The American Rescue Plan Act (ARPA; P.L. 117-2) modified and further extended the payroll tax
credits for COVID-19-related paid sick and paid family leave. APRA provided paid leave tax
credits for paid leave provided April 1, 2021, through September 30, 2021.70 The paid leave tax
credits in ARPA were similar to those provided in FFCRA and P.L. 116-260, with a few notable
modifications, including the following:
 The 10-day limit on paid sick leave was reset for leave taken after March 31,
2021.
 The per-employee limit on qualified family leave wages was increased to
$12,000 (or 60 days for self-employed individuals).
 Paid leave credits were allowed for sick leave taken to obtain a COVID-19
vaccine or due to illness related to immunization, or for leave taken while waiting
for COVID-19 test results.
 State and local governments, as well as 501(c)(1) tax-exempt federal government
entities, could claim the credit.
 The payroll tax credit was claimed against the employer’s portion of the
Medicare (HI) tax (the Medicare HI trust fund was not affected).
 Antidiscrimination rules required that leave must be provided to all employees.

70 26 U.S.C §§3131-3132.
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Studies have found that access to paid sick leave can reduce transmission of contagious viruses,
and enhanced access to paid leave was one policy intended to reduce the spread of COVID-19.71
The paid leave mandate in FFCRA, however, was not comprehensive. The legislation expanded
access to paid sick and family leave for employees at many small and mid-sized businesses.
Employees of large businesses and certain worker groups did not have guaranteed access to paid
sick or family leave under FFCRA.
Similarly, the tax credits provided in FFCRA were not available to all employers, nor to all
employers required to provide leave. State and local government employers, including school
districts and public colleges and universities, were required to provide leave but not allowed tax
credits to offset FFCRA leave mandate compliance costs. Later, after the mandate expired, ARPA
allowed certain government employers voluntarily choosing to provide leave access to tax credits.
The JCT estimated that the paid leave tax credits in FFCRA would reduce tax revenue by $104.9
billion (Table 4). Extending the tax credits through March 31, 2021, was estimated to reduce
federal tax revenue by an additional $1.6 billion, while providing the credits from April 1, 2021,
through September 30, 2021, was estimated to reduce federal revenues by $6.3 billion.
Employee Retention Tax Credit
The employee retention tax credit (ERTC) was first enacted in the CARES Act (P.L. 116-136) in
March 2020.72 The ERTC allowed businesses to claim a refundable credit against their payroll tax
liability for a percentage of wages they paid to workers after March 12, 2020, and before January
1, 2021. Initially, the credit was 50% of up to $10,000 in qualifying wages. Eligible employers
included those who (1) were required to fully or partially suspend operations due to a COVID-19-
related order (including nonprofit employers); or (2) had gross receipts 50% less than gross
receipts in the same quarter in the prior calendar year (with the credit no longer available once
gross receipts were 80% of prior-year calendar quarter gross receipts). Eligible employers
included tax-exempt organizations. Employers with more than 100 full-time employees could
only claim the credit for wages paid when employee services were not provided. Employers with
100 or fewer full-time employees could claim the credit for any otherwise qualifying wages that
were paid. Employers receiving Paycheck Protection Program (PPP) loans initially were not
eligible to claim the ERTC.73 Retroactive changes in P.L. 116-260 provided that employers
receiving PPP loans qualified for the ERTC with respect to wages not used to support PPP loan
forgiveness.
The credit was structured so that employers could be reimbursed when processing payroll by
reducing required deposits of payroll taxes by the anticipated amount of the credit. Many
businesses make regular payroll tax payments with their payroll cycle (e.g., biweekly). The credit
was also advanceable, meaning that businesses expecting credit amounts in excess of payroll tax
liability could file for an advance payment from the IRS. These reductions in payroll taxes paid

71 Stefan Pichler, Katherine Wen, and Nicolas R. Ziebarth, “COVID-19 Emergency Sick Leave Has Helped Flatten The
Curve In The United States,” Health Affairs, vol. 39, no. 12 (October 14, 2020), pp. 2197-2204.
72 For more information, see CRS Insight IN11299, COVID-19: The Employee Retention Tax Credit, by Molly F.
Sherlock.
73 For more information, see CRS Report R46397, SBA Paycheck Protection Program (PPP) Loan Forgiveness: In
Brief, by Robert Jay Dilger; CRS Insight IN11324, CARES Act Assistance for Employers and Employees—The
Paycheck Protection Program, Employee Retention Tax Credit, and Unemployment Insurance Benefits: Overview
(Part 1), coordinated by Molly F. Sherlock; and CRS Insight IN11329, CARES Act Assistance for Employers and
Employees—The Paycheck Protection Program, Employee Retention Tax Credit, and Unemployment Insurance
Benefits: Assessment of Alternatives (Part 2), coordinated by Molly F. Sherlock.
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and advance payments were then reconciled with the business’s actual payroll tax liability and
ERTC amount on quarterly payroll tax filings with the IRS.
The ERTC was subsequently extended by the Taxpayer Certainty and Disaster Tax Relief Act of
2020 (Division EE of the Consolidated Appropriations Act, 2021, P.L. 116-260), which applied to
wages paid from January 1, 2021, through June 30, 2021.74 P.L. 116-260 increased the maximum
credit available from $5,000 (50% of $10,000 in qualifying wages) to $14,000 (70% of $20,000
in qualifying wages). The legislation modified the eligibility such that employers that had gross
receipts 20% less than gross receipts in the same quarter in the prior calendar year or prior
calendar quarter could qualify. The threshold below which employers could claim the credit for
all wages paid, as opposed to claiming it for wages paid only when services were not provided,
was increased to 500 full-time employees.
A second extension of the ERTC was included in the American Rescue Plan Act of 2021 (ARPA,
P.L. 117-2). When ARPA became law in March 2021, the ARPA ERTC applied to wages paid
between July 1, 2021, and December 31, 2021. Under ARPA, a credit of 70% on up to $10,000 in
wages was allowed for the third and fourth quarters of 2021. Thus, under ARPA, the maximum
credit amount for 2021 was increased from $14,000 to $28,000 (or $7,000 per quarter for the full
2021 calendar year). A credit of up to $50,000 per calendar quarter was also provided to recovery
startup businesses, defined as businesses established after February 15, 2020, with average
annual gross receipts that do not exceed $1 million. Under ARPA, severely financially distressed
employers—those with gross receipts that were less than 10% of what they were in the same
calendar quarter in 2019—were able to treat all wages as qualifying wages.
The Infrastructure Investment and Jobs Act (IIJA, P.L. 117-58), signed into law by President
Biden on November 15, 2021, changed the dates of the ARPA ERTC extension. Specifically, the
IIJA changed the ERTC to apply to wages paid between July 1, 2021, and September 30, 2021
(unless the wages are paid by an employer that is a recovery startup business).75 The early
termination of the ERTC was included in the IIJA as a revenue-raising provision. The JCT
estimated that moving the termination date forward, effectively repealing the credit for the fourth
quarter of 2021 for most employers, would increase FY2022 tax revenue by an estimated $8.2
billion.76
The ERTC was intended to help businesses keep employees on their payrolls during the COVID-
19 pandemic. Structuring the credit as a payroll tax credit, as opposed to an income tax credit,
allowed tax relief to be delivered relatively quickly. Other potentially attractive features of payroll
tax credits are that the benefits extend to all employers, as opposed to being limited to taxpayers
with income tax liability, and that payroll tax credits can be claimed by nonprofit employers.
One metric for evaluating the effectiveness of ERTCs relates to the economic efficiency, or “bang
for the buck,” of these incentives. To the extent that this credit is claimed for employees that
would have been retained absent this credit, it is less economically efficient than payments
directly targeted at those who are laid off.

74 See CRS In Focus IF11721, The Employee Retention and Employee Retention and Rehiring Tax Credits, by Molly F.
Sherlock.
75 See CRS Insight IN11819, Early Sunset of the Employee Retention Credit, by Anthony A. Cilluffo and Molly F.
Sherlock.
76 Joint Committee on Taxation, Estimated Revenue Effects of the Provisions in Division H or an Amendment in the
Nature of a Substitute to H.R. 3684, Offered by Ms. Sinema, Mr. Portman, Mr. Manchin, Mr. Cassidy, Mrs. Shaheen,
Ms. Collins, Mr. Tester, Ms. Murkowski, Mr. Warner, and Mr. Romney, the “Infrastructure Investment and Jobs Act,”
JCX-33-21, August 2, 2021, at https://www.jct.gov/publications/2021/jcx-33-21/.
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There are also questions about the credit’s potential for economic relief. If employers have laid
off employees during an economic downturn due to lack of consumer demand, employers may be
slow to hire, even with employment subsidies. Economic theory tends to indicate that demand-
side stimulus (providing additional resources to consumers), rather than supply-side (like
employer tax relief), is the most effective tool for boosting employment during periods of
economic weakness.
By mid-2021, take-up of the ERTC continued to be lower than some had anticipated.77 One factor
contributing to the low take-up might have been that some businesses found the credit confusing
and complex.78 Another potential factor was a lack of awareness.79 In addition, employers
receiving a PPP loan were initially ineligible for the ERTC, although the restriction was later
removed. Collectively, these factors are consistent with the findings that taxpayers using paid
preparers were more likely to claim the ERTC.80 Perceived underutilization of the credit likely led
to the credit’s early sunset being used as a revenue-raising provision in IIJA.
When the ERTC was enacted, the JCT estimated that the credit would reduce federal tax revenue
by $54.6 billion in FY2021 and FY2022 (Table 4). Modifications enacted at the end of 2020 were
estimated to result in an additional $5.2 billion in revenue loss, while extending the credit through
June 30, 2021, was estimated to reduce revenues by $15.5 billion. The ARPA extension, covering
the rest of 2021, was estimated to reduce tax revenue by another $10.2 billion. The early repeal of
the ERTC resulted in an estimated revenue gain of $8.2 billion.
Payroll Tax Deferrals
Employer Payroll Tax Deferral
The CARES Act contained a delay in payment of the employer share of payroll taxes (as opposed
to the employee’s share of payroll taxes).81 Specifically, the CARES Act deferred employer
OASDI payroll taxes due between March 27, 2020, and December 31, 2020. Deferred tax liability
is to be paid in two installments—with half of the deferred amount paid on or before December
31, 2021, and the remainder due on or before December 31, 2022.82 For businesses, the payroll

77 Lucas Goodman, Take-up of Payroll Tax-Based Subsidies During the COVID-19 Pandemic, The Department of the
Treasury, Office of Tax Analysis, Working Paper 121, November 2021, at https://home.treasury.gov/system/files/131/
WP-121.pdf.
78 Sony Kassam and Allyson Versprille, “HILL TAX BRIEFING: Infrastructure Talks Drag Over Pay-Fors,” Daily Tax
Report, July 28, 2021; and Genevieve Douglas, “Employee Retention Credit Rescues Some Companies, Baffles
Others,” Daily Tax Report, July 28, 2021.
79 One survey of small businesses in October 2021 found that nearly half of survey respondents were not at all familiar
with the ERTC. National Federation of Independent Businesses, “Covid-19 Small Business Survey,” November 2021,
at https://assets.nfib.com/nfibcom/Covid-19-20-Survey-FINAL.pdf.
80 Lucas Goodman, Take-up of Payroll Tax-Based Subsidies During the COVID-19 Pandemic, The Department of the
Treasury, Office of Tax Analysis, Working Paper 121, November 2021, at https://home.treasury.gov/system/files/131/
WP-121.pdf.
81 For a discussion of the payroll tax deferral and other policy options for providing businesses payroll tax relief, see
CRS Insight IN11260, COVID-19 Economic Stimulus: Business Payroll Tax Cuts, by Molly F. Sherlock and Donald J.
Marples.
82 On December 27, 2021, the IRS issued a reminder to taxpayers that for those who chose to defer payroll taxes, the
first repayment installment was due. Internal Revenue Service, “IRS reminder: For many employers and self-employed
people, deferred Social Security tax payment due Jan. 3,” press release, December 27, 2021, https://www.irs.gov/
newsroom/irs-reminder-for-many-employers-and-self-employed-people-deferred-social-security-tax-payment-due-jan-
3.
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tax deferral was intended to free up cash flow. The payroll tax deferral is similar to an interest-
free loan, with the idea being that, upon enactment, businesses would repay deferred tax liability
once normal business operations resumed at a later point in time. Large firms were more likely
than small firms to choose to defer payroll taxes.83
In total, the cost of the employer payroll tax deferral was estimated to be modest relative to other
forms of payroll tax relief, at $12.3 billion (Table 4). It was estimated that overall payroll tax
receipts would fall by $211.1 billion in FY2020, and $140.7 billion in FY2021 (years in which
taxes were deferred). However, during FY2022 and FY2023, payroll tax collections are
anticipated to increase by $171.0 billion and $168.5 billion, as deferred taxes are repaid.
Employee Payroll Tax Deferral84
On August 8, 2020, then-President Trump issued a presidential memorandum allowing the
deferral of individual payroll tax obligations from September 1, 2020, through December 31,
2020.85 Specifically, the memorandum allowed for the deferred collection and payments of the
employee 6.2% portion of the OASDI payroll tax.86 The deferral was for employees with
biweekly compensation of generally less than $4,000. Since decisions about withholding of
employee payroll tax amounts generally are made by the employer, decisions regarding
participation in deferral were also made at the employer (as opposed to employee) level.
Deferred payroll taxes were required to be repaid in 2021. IRS Notice 2020-65 provided that any
deferred employee payroll tax be withheld and paid ratably in the first four months of 2021,
between January 1, 2021, and April 30, 2021. A provision in the COVID-Related Tax Relief Act
of 2020 (Division N, Title II, Subtitle B of P.L. 116-260) extended the repayment period through
December 31, 2021. The JCT estimated that this policy change would reduce federal revenues by
$469 million in FY2021, but revenues would then increase by $453 million in FY2022 as
deferred amounts were repaid (leaving a revenue loss of $16 million over the FY2021-FY2030
budget window).87
Outside of the executive branch, few employers were known to participate.88 One study provides
data to suggest that take-up was “trivially small.”89 Administrative concerns related to
implementation likely were a factor in the lack of take-up. There are also questions about the
potential economic effects from changing the timing of when individual OASDI payroll taxes are

83 Lucas Goodman, Take-up of Payroll Tax-Based Subsidies During the COVID-19 Pandemic, The Department of the
Treasury, Office of Tax Analysis, Working Paper 121, November 2021, at https://home.treasury.gov/system/files/131/
WP-121.pdf.
84 For additional background, see CRS Insight IN11488, COVID-19: Presidential Order Deferring Individual Payroll
Taxes, by Molly F. Sherlock and Donald J. Marples.
85 See Donald J. Trump, “Memorandum on Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19
Disaster,” August 8, 2020, at https://trumpwhitehouse.archives.gov/presidential-actions/memorandum-deferring-
payroll-tax-obligations-light-ongoing-covid-19-disaster/. Guidance was provided on August 28, 2020, in IRS Notice
2020-65, “Relief with Respect to Employment Tax Deadlines Applicable to Employers Affected by the Ongoing
Coronavirus (COVID-19) Disease 2019 Pandemic,” at https://www.irs.gov/pub/irs-drop/n-20-65.pdf.
86 The deferral also applied to the railroad retirement tax attributable to the individual Social Security tax.
87 Joint Committee on Taxation, Estimated Budget Effects of the Revenue Provisions Contained in Rules Committee
Print 116-68, the “Consolidated Appropriations Act, 2021,” JCX-24-20, December 21, 2020, at https://www.jct.gov/
publications/2020/jcx-24-20/.
88 Heather Long, “Trump’s parting gift to federal workers: Thinner paychecks,” The Washington Post, January 12,
2021, at https://www.washingtonpost.com/business/2021/01/12/trump-tax-deferral/.
89 Lucas Goodman, Take-up of Payroll Tax-Based Subsidies During the COVID-19 Pandemic, The Department of the
Treasury, Office of Tax Analysis, Working Paper 121, November 2021, p. 13, at https://home.treasury.gov/system/
files/131/WP-121.pdf.
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paid. Employees employed by employers choosing to defer payroll taxes could see increased
take-home pay in the near term, only to see those increases offset with reductions in take-home
pay when deferred amounts are repaid. Delaying payroll tax liability for several months does not
provide working individuals with additional economic resources in the longer term, nor does it
change the incentives to work, save, or invest. Further, payroll tax deferrals do not provide
additional resources to nonworking or unemployed individuals. Forgiving deferred payroll tax
liability could provide additional fiscal stimulus.
Table 4. COVID-19 Payroll Tax Relief
Billions of dollars
Total
Reduction

2020
2021
2022
2023
in Revenue
Paid Leave Tax Creditsa

FFCRA
$89.1
$15.7
—
—
$104.9

COVID-Related Tax Relief Act of 2020
—
$1.2
$0.4
—
$1.6

ARPA
—
$4.5
$1.7
(i)
$6.3
Employee Retention Tax Credit

CARES Act
$49.1
$5.5
—
—
$54.6

Taxpayer Certainty and Disaster Tax
$5.2
—
—
—
$5.2
Relief Act of 2020 (clarifications and
improvements)

Taxpayer Certainty and Disaster Tax
$13.1
$2.3
—
—
$15.5
Relief Act of 2020 (modification and
extension)

ARPA
—
$3.1
$7.1
(i)
$10.2

Infrastructure Investment and Jobs Act
—
—
-$8.2
—
-$8.2
Employer Payroll Tax Deferral

CARES Act
$211.1
$140.7
-$171.0
-$168.5
$12.3
Employee Payroll Tax Deferralb

COVID-Related Tax Relief Act of 2020
—
$0.5
-$0.5
—
(i )
Sources: Joint Committee on Taxation, Estimated Revenue Effects of the Revenue Provisions Contained in Division G
of H.R. 6210, the “Families First Coronavirus Response Act,” March 16, 2020, JCX-9-20, at https://www.jct.gov/
publications/2020/jcx-9-20/; Joint Committee on Taxation, Estimated Revenue Effects of the Revenue Provisions
Contained in an Amendment in the Nature of a Substitute to H.R. 748, the “Coronavirus Aid, Relief, and Economic
Security (‘CARES’) Act,” as Passed by the Senate on March 25, 2020, and Scheduled for Consideration by the House of
Representatives on March 27, 2020, April 23, 2020, JCX-11R-20, at https://www.jct.gov/publications/2020/jcx-11r-
20/; Joint Committee on Taxation, Estimated Budget Effects of the Revenue Provisions Contained in Rules Committee
Print 116-68, the “Consolidated Appropriations Act, 2021,” JCX-24-20, December 21, 2020, at https://www.jct.gov/
publications/2020/jcx-24-20/; Joint Committee on Taxation, Estimated Revenue Effects of H.R. 1319, the “American
Rescue Plan Act of 2021,” as Amended by the Senate, Scheduled for Consideration by the House of Representatives,
JCX-14-21, March 9, 2021, at https://www.jct.gov/publications/2021/jcx-14-21/; and Joint Committee on
Taxation, Estimated Revenue Effects of the Provisions in Division H or an Amendment in the Nature of a Substitute to
H.R. 3684, Offered by Ms. Sinema, Mr. Portman, Mr. Manchin, Mr. Cassidy, Mrs. Shaheen, Ms. Collins, Mr. Tester, Ms.
Murkowski, Mr. Warner, and Mr. Romney, the “Infrastructure Investment and Jobs Act,” JCX-33-21, August 2, 2021, at
https://www.jct.gov/publications/2021/jcx-33-21/.
Notes: Cost estimates include the estimated revenue reduction from the policy as enacted as well as estimated
revenue reductions from subsequent extensions or modifications. An (i) indicates a gain in revenue of less than
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$500,000. An (ii) indicates a revenue reduction of less than $50 mil ion. A negative revenue reduction is a
revenue gain. Rows may not sum due to rounding.
a. The JCT cost estimates for this provision include the income tax credits for self-employed individuals.
b. The deferral was ordered in a presidential memorandum, as opposed to being legislatively enacted. Thus,
JCT did not provide a cost estimate for the policy upon implementation.

Author Information

Anthony A. Cilluffo
Molly F. Sherlock
Analyst in Public Finance
Specialist in Public Finance

Acknowledgments
This report benefitted from helpful comments and expertise provided by Patricia A. Davis, Specialist in
Health Care Financing; Barry F. Huston, Analyst in Social Policy; Zhi Li, Analyst in Social Policy; Donald
J. Marples, Specialist in Public Finance; and Julie M. Whittaker, Specialist in Income Security.

Disclaimer
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