Official Summaries

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.

Current Full Text

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 996 Introduced in House (IH)]

<DOC>






119th CONGRESS
  1st Session
                                H. R. 996

 To amend the Internal Revenue Code of 1986 to enhance the paid family 
           and medical leave credit, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            February 5, 2025

  Mr. Feenstra (for himself, Mrs. Bice, and Ms. Perez) 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 enhance the paid family 
           and medical leave credit, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Paid Family and Medical Leave Tax 
Credit Extension and Enhancement Act''.

SEC. 2. ENHANCEMENT OF PAID FAMILY AND MEDICAL LEAVE CREDIT.

    (a) In General.--Section 45S of the Internal Revenue Code of 1986 
is amended--
            (1) in subsection (a)--
                    (A) by striking paragraph (1) and inserting the 
                following:
            ``(1) In general.--For purposes of section 38, in the case 
        of an eligible employer, the paid family and medical leave 
        credit is an amount equal to either of the following (as 
        elected by such employer):
                    ``(A) The applicable percentage of the amount of 
                wages paid to qualifying employees with respect to any 
                period in which such employees are on family and 
                medical leave.
                    ``(B) If such employer has an insurance policy with 
                regards to the provision of paid family and medical 
                leave which is in force during the taxable year, the 
                applicable percentage of the total amount of premiums 
                paid or incurred by such employer during such taxable 
                year with respect to such insurance policy.'', and
                    (B) by adding at the end the following:
            ``(3) Rate of payment determined without regard to whether 
        leave is taken.--For purposes of determining the applicable 
        percentage with respect to paragraph (1)(B), the rate of 
        payment under the insurance policy shall be determined without 
        regard to whether any qualifying employees were on family and 
        medical leave during the taxable year.'',
            (2) in subsection (b)(1), by striking ``credit allowed'' 
        and inserting ``wages taken into account'',
            (3) in subsection (c), by striking paragraphs (3) and (4) 
        and inserting the following:
            ``(3) Aggregation rule.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), all persons which are treated as a 
                single employer under subsections (b) and (c) of 
                section 414 shall be treated as a single employer.
                    ``(B) Exception.--
                            ``(i) In general.--Subparagraph (A) shall 
                        not apply to any person who establishes to the 
                        satisfaction of the Secretary that such person 
                        has a substantial and legitimate business 
                        reason for failing to provide a written policy 
                        described in paragraph (1) or (2).
                            ``(ii) Substantial and legitimate business 
                        reason.--For purposes of clause (i), the term 
                        `substantial and legitimate business reason' 
                        shall not include the operation of a separate 
                        line of business, the rate of wages or category 
                        of jobs for employees (or any similar basis), 
                        or the application of State or local laws 
                        relating to family and medical leave, but may 
                        include the grouping of employees of a common 
                        law employer.
            ``(4) Treatment of benefits mandated or paid for by state 
        or local governments.--For purposes of this section, any leave 
        which is paid by a State or local government or required by 
        State or local law--
                    ``(A) except as provided in subparagraph (B), shall 
                be taken into account in determining the amount of paid 
                family and medical leave provided by the employer, and
                    ``(B) shall not be taken into account in 
                determining the amount of the paid family and medical 
                leave credit under subsection (a).'',
            (4) in subsection (d)--
                    (A) in paragraph (1), by inserting ``(or, at the 
                election of the employer, for not less than 6 months)'' 
                after ``1 year or more'', and
                    (B) in paragraph (2)--
                            (i) by inserting ``, as determined on an 
                        annualized basis (pro-rata for part-time 
                        employees),'' after ``compensation'', and
                            (ii) by striking the period at the end and 
                        inserting ``, and'', and
                    (C) by adding at the end the following:
            ``(3) is customarily employed for not less than 20 hours 
        per week.'', and
            (5) by striking subsection (i).
    (b) No Double Benefit.--Section 280C(a) of the Internal Revenue 
Code of 1986 is amended--
            (1) by striking ``45S(a)'' and inserting ``45S(a)(1)(A)'', 
        and
            (2) by inserting after the first sentence the following: 
        ``No deduction shall be allowed for that portion of the 
        premiums paid or incurred for the taxable year which is equal 
        to that portion of the paid family and medical leave credit 
        which is determined for the taxable year under section 
        45S(a)(1)(B).''.
    (c) Outreach.--
            (1) SBA and resource partners.--Each district office of the 
        Small Business Administration and each resource partner of the 
        Small Business Administration, including small business 
        development centers described in section 21 of the Small 
        Business Act (15 U.S.C. 648), women's business centers 
        described in section 29 of such Act (15 U.S.C. 656), each 
        chapter of the Service Corps of Retired Executives described in 
        section 8(b)(1)(B) of such Act (15 U.S.C. 637(b)(1)(B)), and 
        Veteran Business Outreach Centers described in section 32 of 
        such Act (15 U.S.C. 657b), shall conduct outreach to relevant 
        parties regarding the paid family and medical leave credit 
        under section 45S of the Internal Revenue Code of 1986, 
        including through--
                    (A) targeted communications, education, training, 
                and technical assistance; and
                    (B) the development of a written paid family leave 
                policy, as described in paragraphs (1) and (2) of 
                section 45S(c) of the Internal Revenue Code of 1986.
            (2) Internal revenue service.--The Secretary of the 
        Treasury (or the Secretary's delegate) shall perform targeted 
        outreach to employers and other relevant entities regarding the 
        availability and requirements of the paid family and medical 
        leave credit under section 45S of the Internal Revenue Code of 
        1986, including providing relevant information as part of 
        Internal Revenue Service communications that are regularly 
        issued to entities that provide payroll services, tax 
        professionals, and small businesses.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of enactment of this 
Act.
                                 <all>