Bill Details
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This bill would make the tax credit for employers that offer paid family and medical leave more generous and permanent. In simple terms, it would let businesses get a larger tax break when they provide workers time off for things like a new child, a serious illness, or caring for a family member. It would also remove the current expiration date for this credit, so it would not end unless Congress changes the law again.
- It raises the credit rates for eligible employers. The main credit rate would increase from 12.5% to 25%, and a higher rate could go from 25% to 50%.
- It also increases one of the smaller step-up amounts used in the credit formula, changing it from 0.25 percentage points to 0.50 percentage points.
- It makes the credit permanent by removing the part of the tax law that would have caused it to expire.
- The changes would apply to tax years beginning after December 31, 2025.
Official Summaries
This bill increases the business tax credit for paid family and medical leave to up to 50% (from 25%) of the wages paid by an eligible employer to a qualifying employee while the employee is on family and medical leave.
Under current law, an eligible employer may claim a tax credit (through 2025) for between 12.5% and 25% of the wages paid to a qualified employee while the employee is on family and medical leave. The percentage of wages allowed as a tax credit increases proportionally, depending on what percentage of an employee’s normal wages is paid to the employee while the employee is on family and medical leave.
The bill increases the tax credit to between 25% and 50% of the wages paid to an employee while the employee is on family and medical leave, depending on what percentage of an employee’s normal wages is paid to the employee while the employee is on family and medical leave.
Under current law and the bill, an employer must pay at least 50% of the employee's normal wages while the employee is on leave to qualify for the tax credit.
Current Full Text
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1424 Introduced in House (IH)]
<DOC>
119th CONGRESS
1st Session
H. R. 1424
To amend the Internal Revenue Code of 1986 to increase the employer tax
credit for paid family and medical leave.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
February 18, 2025
Mr. Mackenzie introduced the following bill; which was referred to the
Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to increase the employer tax
credit for paid family and medical leave.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. INCREASE IN EMPLOYER CREDIT FOR PAID FAMILY AND MEDICAL
LEAVE.
(a) Increase in Credit Percentages.--Section 45S(a)(2) of the
Internal Revenue Code of 1986 is amended--
(1) by striking ``12.5 percent'' and inserting ``25
percent'',
(2) by striking ``25 percent'' and inserting ``50
percent'', and
(3) by striking ``0.25 percentage points'' and inserting
``0.50 percentage points''.
(b) Credit Made Permanent.--Section 45S of such Code is amended by
striking subsection (f).
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2025.
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