The donated leave will not be treated as employee income and employees cannot claim a deduction for donated leave. However, employers, are eligible to deduct such cash payments as business expenses or as a charitable contribution deductions.
IRS Guides on Leave-based Donations
The Internal Revenue Service says donations to charitable organizations that provide relief to victims of the COVID-19 pandemic in exchange for sick, vacation or personal leave which their employees forgo will not be treated as compensation. Gudiance was delivered under Notice 2020-46
