Federal tax law currently gives employers a credit (under §45S of the tax code) for offering paid family and medical leave to their workers — but the credit is set to expire and only counts wages paid during leave. This bill would make the credit permanent by removing the sunset, and would let employers claim it based on the insurance premiums they pay for paid-leave coverage instead of (or in addition to) the wage method. It would also expand which workers count as "qualifying" — employees with at least six months on the job (down from one year) and 20 hours per week (down from 25) would be eligible at the employer's election. The Small Business Administration and IRS would be required to do targeted outreach so smaller employers know the credit exists.
Corporate Benefits
- §45S paid-leave tax credit — Expanded to allow credit for insurance premiums paid
- §45S paid-leave tax credit — Made permanent by removing the scheduled sunset
Average Household Impact
- Worker eligibility for paid-leave credit — Tenure floor lowered to 6 months (from 1 year)
- Worker eligibility for paid-leave credit — Hours floor lowered to 20 per week (from 25)
Transparency & Accountability
- Sunset on §45S paid-leave credit — Removed, ending the credit's scheduled re-examination
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 alsoallows 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, andprovides 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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