Sponsors (3)
The bill makes it easier and more predictable for many employers—especially small businesses—to claim the paid leave tax credit and increases outreach, but narrows who and what counts for the credit (excluding many part-time workers and limiting offsets/deductions), shifting costs and administrative burdens onto certain employers and workers.
Small employers that purchase paid family and medical leave insurance can base the employer credit on insurance premiums and count policy-rate premiums even if no leave was taken, simplifying credit calculation and giving predictable credit amounts for budgeting.
Small businesses will receive targeted outreach from SBA partners and the IRS to raise awareness of the credit and the written-policy requirement, helping more firms claim the benefit.
Employers and state/local governments get a clear rule that employer-provided leave (including state/local-mandated or -paid leave as counted toward employer leave) is treated to avoid double counting and preserve federal credit integrity.
Workers who are part-time (under 20 hours/week) become ineligible for the employer credit for those hours, reducing support for parents and low-income individuals with irregular schedules.
Tightened aggregation rules presume commonly controlled entities are a single employer, which may force small entities to adopt uniform written leave policies or lose separate treatment—raising administrative burdens and possibly reducing access to the credit.
Excluding state- or local-paid leave from the federal credit reduces the federal offset for employers in states with paid-leave programs, increasing net costs for those employers and shifting more cost to businesses and taxpayers.
Based on analysis of 2 sections of legislative text.
Allows employers to claim the paid family and medical leave tax credit based on wages or employer‑paid insurance premiums, adds a 20‑hour threshold, tightens aggregation rules, and excludes state‑paid leave from the credit.
Introduced February 5, 2025 by Randy Feenstra · Last progress February 5, 2025
Allows employers to claim the federal paid family and medical leave tax credit either as a percentage of wages paid to qualifying employees on leave or as a percentage of premiums paid for an employer‑held insurance policy, and changes several eligibility and administrative rules. It adds a 20‑hour per week work threshold for qualifying employees, tightens rules that treat related entities as a single employer unless a substantial business reason exists, excludes state‑mandated or -paid leave from qualifying for the credit, prevents a tax deduction for the portion of insurance premiums equal to the credit, and directs SBA and IRS outreach to inform employers about the credit and the need for a written paid leave policy.