YourVoice.Now Summary
Workers & JobsCorporate BenefitsTransparency & AccountabilityEmployers would get more ways to claim the paid leave tax break — workers under 20 hours a week would stop counting.
Workers & Jobs
Today a worker needs a year on the job before their leave earns the employer a credit. The employer could pick a six-month mark instead. The choice belongs to the employer, not the worker.
To count toward the credit, a worker would have to be scheduled for at least 20 hours a week. Today there is no hours test, so an employer's policy can cover shorter shifts and still earn the credit.
Corporate Benefits
A business that buys paid leave insurance could count what it pays for the policy. Today the credit counts only wages paid to a worker who is on leave. The policy has to be active during the tax year.
Leave that a state pays for or requires would count toward the amount of leave an employer provides. That lets employers in those states qualify. They still could not claim the credit on the state-funded leave itself.
Related businesses count as one employer. So one arm with no written leave policy can block the whole group. A business could get out of that by showing a solid reason. Pay levels, job types, and state leave laws would not count.
Transparency & Accountability
Small Business Administration offices and their partner centers would have to tell employers about the credit. They would also help write a leave policy. The IRS would add it to notices it already sends payroll firms and tax pros.
The credit was written with an expiration date, so Congress had to vote again to keep it going. Removing that date makes it permanent, with no scheduled look back at whether it works.
More about this bill
Employers could claim a tax break for paid family and medical leave in more ways. It would also no longer have an end date. A business that buys paid leave insurance could count what it pays for the policy. That holds even in a year when no worker takes leave. Businesses in states that run their own paid leave programs could count that leave toward qualifying. Who counts as a covered worker would change. An employer could count staff after six months on the job instead of a full year. But workers who usually work under 20 hours a week would stop counting at all. Most of this is already law. Congress put the same tax text in the July 2025 tax law, for tax years starting in 2026. Only one part is new. The Small Business Administration and the IRS would have to tell employers the credit exists.
Congressional Summary
Paid Family and Medical Leave Tax Credit Extension and Enhancement Act This bill makes the paid family and medical leave tax credit permanent, expands eligibility for the credit, requires outreach to increase awareness of the tax credit, and makes other changes to the credit. Currently, an eligible employer may claim a tax credit (through 2025) for up to 25% of wages paid to a qualifying employee (who has worked for the employer for one year or more) while the employee is on family and medical leave. The bill makes the tax credit for paid family and medical leave permanent and allows an eligible employer to claim the tax credit for 25% of either (1) wages paid to a qualifying employee while the employee is on family and medical leave, or (2) premiums paid for paid family or medical leave insurance. The bill also allows an employer to provide family and medical leave to an employee who has worked for the employer for six months or more, provides that leave that is paid by a state or local government or required by state or local law must be taken into account in determining the amount of leave provided by the employer but may not be counted when determining the amount of the credit, and provides a limited exception to the requirements related to written family and medical leave policies. Finally, the bill requires targeted outreach to employers and other relevant parties regarding the availability and requirements of the tax credit.
Details
- Congress
- 119th
- Chamber
- Senate
- Status
- summarized
- Action
- Introduced in Senate
- Action Date
- 2025-02-04
- Date Added
- 2026-05-06
- Source
- Congress.gov →
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