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A bill to amend the Internal Revenue Code of 1986 to enhance the paid family and medical leave credit, and for other purposes.
2/5/2025, 11:56 AM
Summary of Bill S 400
The bill proposes several key enhancements to the existing credit, including increasing the maximum amount of leave that can be taken into account for the credit calculation, expanding the definition of family members for whom leave can be taken, and extending the credit to self-employed individuals.
Additionally, the bill includes provisions to ensure that the credit is more accessible to small businesses and low-income workers. It also seeks to streamline the application process for claiming the credit and provide additional guidance to employers on how to qualify for and utilize the credit. Overall, the Paid Family and Medical Leave Enhancement Act aims to incentivize employers to provide paid leave to their employees for family and medical reasons, ultimately improving work-life balance and supporting the well-being of American workers.
Congressional Summary of S 400
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.
