What’s New-Paid Family and Medical Leave Tax Credit?
What’s New-Paid Family and Medical Leave Tax Credit?
Posted: September 18th, 2026
The Working Families Tax Cuts, enacted in 2025, permanently expanded the federal Paid Family and Medical Leave Tax Credit from a temporary provision to a permanent general business credit.
What is Paid Family and Medical Leave?
Paid Family and Medical Leave is paid leave that lets employees recover from serious health conditions or care for certain family members with serious health conditions. The change is to encourage more employers to offer 12 weeks of paid leave.
Key Changes & Eligibility
- Permanent Credit: The credit is now a permanent general business credit.
- Expanded Eligibility:
Employees who have been employed for the last six months.
Part-time employees working 20+ hours per week.
- Broader Coverage: Employers can claim the credit for insurance premiums to provide leave or wages during the leave.
- State & Local Mandates: Employers can count leave provided under state and local mandates toward eligibility for the credit.
- Businesses can now take 12-25% of wages paid to qualifying employees for up to 12 weeks of family and medical leave.
Employers can choose between the wage & premium method to receive credit.
The above information is of a general nature only and should not be relied upon for specific situations. Click here for information.
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