Bill Details
S.400 - 119th Congress
Status
Latest action
2025-02-04 - Read twice and referred to the Committee on Finance.
Introduced Date
2025-02-04
Policy Area
Taxation
Committees
View committees (1)
Sponsors
Cosponsors
5
0
0
AI Summary This summary was generated by AI from the bill text. AI can get information wrong.
This bill would expand and extend the tax credit that helps employers offer paid family and medical leave. In simple terms, it gives businesses more ways to get tax relief if they provide paid leave to workers who need time off for family or medical reasons. It also updates who can qualify, sets clearer rules for how the credit is figured, and tells the Small Business Administration and the IRS to help spread the word so more employers learn about the credit.
- Employers could claim the credit either for wages paid to workers while they are on leave or for premiums paid for a paid leave insurance policy.
- The bill would let the credit cover some workers after 6 months of employment, if the employer chooses, instead of always waiting a full year. It also says part-time workers are counted using annualized, pro-rated pay rules and must usually work at least 20 hours per week.
- State or local paid leave that an employer is required to provide would still count when measuring the leave offered, but it would not count again when calculating the tax credit. The bill also prevents employers from getting two tax breaks for the same premium costs.
- The SBA, its local partners, and the IRS would have to do outreach, education, and technical help for employers, especially small businesses, about how the credit works and how to create a written leave policy.
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]
[S. 400 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
1st Session
S. 400
To amend the Internal Revenue Code of 1986 to enhance the paid family
and medical leave credit, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
February 4, 2025
Mrs. Fischer (for herself and Mr. King) introduced the following bill;
which was read twice and referred to the Committee on Finance
_______________________________________________________________________
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>