Income, payroll tax suspensions proposed for some essential workers
Lawmakers want to give some essential workers a break from certain federal tax obligations
Some frontline workers face higher tax bills for their work throughout the pandemic, but lawmakers are looking for ways to give these essential employees financial relief.
Legislation introduced by Iowa Sen. Joni Ernst, known as the FRNT LINE Act, would suspend federal income taxes for essential workers up to an annual income cap, which is set at the highest level of pay for someone enlisted in the armed forces.
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Further, it would suspend federal payroll taxes for people earning $50,000 or less per year.
Under the proposal, tax suspensions would begin April 1, 2020 and would end on the day that President Trump lifts the national emergency declaration, which includes an automatic sunset on Dec. 31.
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Essential workers would be defined by the government.
In the absence of legislation, some frontline workers may be faced with surprise tax bills.
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Nurses, doctors and other essential employees who traveled across state lines during the coronavirus pandemic may be required to pay taxes on income in the states like New York for the time spent working there.
New York has higher income tax rates than a lot of other states across the country, which means even a credit that workers receive in their home state for the taxes paid there may not be enough to offset it.