Paid Family and Medical Leave Tax Credit Extension and Enhancement Act

This bill expands and clarifies a tax credit for employers who offer paid family and medical leave. Employers could choose to claim the credit based on either the wages they pay workers while on leave or the premiums they pay for an insurance policy that provides paid leave. For insurance, the credit is based on the policy’s pay rate, even if no one actually took leave that year . Employers can’t claim the credit for amounts that are paid by a state or local program, though that government-funded leave can still count toward how much paid leave the employer offers overall . The bill also aims to prevent “double dipping” by adjusting tax rules so the same costs aren’t used for more than one tax benefit .

The plan tightens who counts as a qualifying employee by requiring they usually work at least 20 hours per week. It also sets rules for related companies to be treated as one employer, with limited exceptions. The Small Business Administration and the IRS would do targeted outreach to help employers understand and use the credit. These changes would apply to tax years that start after the bill becomes law .

• Who is affected: Employers that offer paid family and medical leave, especially small businesses; employees who may take such leave .
• What changes: Credit can be based on wages or insurance premiums; state- or locally paid leave doesn’t count toward the credit; qualifying employees generally must work 20+ hours/week; anti–double benefit rules; SBA/IRS outreach .
• When: For taxable years beginning after enactment .